Fixed Rate Mortgages
30-year fixed
15-year fixed
|
 Monthy 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 mortage payments
Rate does not drop if interest rates improve |
Adjustable Rate Mortgages
10/1 ARM
7/1 ARM
3/1 ARM
1-year ARM
6-month ARM
1-month ARM
|
Lower initial monthly payment
Lower payment over a shorter period of time
Rates and payments 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
7-year
5-year
|
Lower initial monthly payment
Lower payment over a shorter period of time
Many balloon mortgages offer the option to convert to a new loan after the initial term |
Risk of rates being higher at the end of the initial fixed period
Risk of foreclosure if you cannot make the balloon payment or if you cannot refinance or if you cannot excercise a conversion option |
| First Time Buyer Programs |
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 the house is sold too early |
| No Point, No Fee Programs |
No closing costs
Less money required to close |
Higher rates
Higher payments |
| Imperfect Credit Programs |
Potential for reestablishing credit if mortgage is paid on time
When used for debt consolodation, monthly debt payments may be redused |
Higher rates
Terms may not be as favorable
Harder to get long term fixed loans
Loans may have prepayment penalties |
| Home Equity Line of Credit |
Only borrow what's needed
Interest paid only on what is borrowed
Flexible access to funds
Interest may be tax deductible |
Rates may change
The maximum interest rate is generally high
Payments can change
Harder to refinance your first mortgage |
| Home Equity Fixed Loan |
Fixed payments
Interest may be tax deductible |
Higher interest rates than on 1st mortgages
Harder to refinance a first mortgage |
