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Loan Programs
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Advantages
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Disadvantages
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Fixed Rate Mortgages
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30, 25, 20, 15, or 10 Year Fixed
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- 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
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- Higher interest rate
- Higher mortgage payments
- Rate does not drop if interest rates improve
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Adjustable Rate Mortgages
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10/1 ARM, 7/1 ARM, 5/1 ARM, 3/1 ARM, 1 year ARM
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- Lower initial monthly payment
- Lower payment over a shorter period of time
- Rates and payments may go down if rates improve
- May qualify for a higher loan amount
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- More risk
- Payments may change over time
- Potential for higher payments if rates go up
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Balloon Mortgages
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7 Year & 5 Year Balloon
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- Lower initial monthly payment
- Lower payment over a shorter period of time
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- Risk of rates being higher at the end of the initial fixed period
- Risk of not being able to refinance before balloon payment
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Home Equity Line of Credit
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Can be amortized over 5-30 years
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- You only borrow what you need
- Pay interest only on what you borrow
- Flexible access to funds
- Interest may be tax deductible
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- Rates can change
- Payments can change
- Harder to refinance the 1st mortgage
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Home Equity Fixed Loan
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Can be amortized over 5-30 years
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- Fixed payments
- Interest may be tax deductible
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- Higher interest rates than on a line of credit or 1st mortgage loan
- Harder to refinance your mortgage once you have a 2nd lien position
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