| LOAN
PROGRAM |
|
ADVANTAGES |
|
DISADVANTAGES |
| |
|
|
|
|
| Fixed
Rate Mortgages |
|
Monthly
payments are fixed over the life of the loan
Interest rate does not change
Protected if rates go up
Can refinance if rates go down |
|
Higher
interest rate
Higher mortgage payments
Rate does not drop if interest rates improve |
| |
Adjustable Rate
Mortgages |
|
Lower
initial monthly payment
Lower payment over a shorter period of time
Rates and payment may go down if rates improve
May qualify for higher loan amounts
|
|
More
risk
Payments may change over time
Potential for high payments if rates go up
|
| |
|
|
|
|
| Balloon
Mortgages |
|
Lower
initial monthly payment
Lower payments over a shorter period of time
Many balloon mortgages offer to convert to a new loan after
initial term
|
|
Risk
of rates being higher at the end of the initial fixed period
Risk of foreclosure if you cannot make balloon payment or if
you cannot refinance or if you cannot exercisethe conversion
option |
| |
|
|
|
|
| 1st
Time Buyer |
|
Lower
down payment
Easier to qualify
Sometimes you may get lower rates
|
|
May
be subject to income and property value limitations
Some programs which have government subsidies may have a recapture
tax if you sell the house too early
|
| |
|
|
|
|
| Stated
Income Program |
|
Don't
need to verify income
Faster approval
|
|
Higher
rates
Higher payments
|
| |
|
|
|
|
No
Point, No Fee Program
|
|
No
closing costs
Faster approval |
|
Higher
rates
Higher payments |
| |
|
|
|
|
| Imperfect
Credit Program |
|
Potential
for reestablishing credit if you pay your mortgage on time
When used for debt consolidation, you may be able to reduce
your monthly debt payment
|
|
Higher
rates
Terms may not be as favorable
Harder to get long term fixed loans
Loans may have prepayment penalties
|
| |
|
|
|
|
| Home
Equity Fixed Loans |
|
Fixed
payments
Interest may be tax deductible
|
|
Higher
interest rates than on 1st mortgages
Harder to refinance your 1st mortgage |
