| How long do you plan to stay in your home? |
Recommended program |
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| 1-3 years |
3/1 ARM, 1 year ARM or 6 month ARM |
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| 3-5 years |
5/1 ARM |
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| 5-7 years |
7/1 ARM |
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| 7-10 years |
10/1 ARM, 30 year fixed or 15 year fixed |
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| 10+ years |
30 year fixed or 15 year fixed |
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| Loan Program |
Advantages |
Disadvantages |
| Fixed Rate Mortgages |
Monthly payments are fixed over the life of the loan |
Higher interest rate |
| 30 year fixed |
Interest rate does not change |
Higher mortgage payments |
| 15 year fixed |
Protected if rates go up |
Rate does not drop if interest rates improve |
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Can refinance if rates go down |
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| Loan Program |
Advantages |
Disadvantages |
| Adjustable Rate Mortgages (ARM) |
Lower initial monthly payment |
More risk |
| 10/1 ARM |
Rates and payments may go down if rates improve |
Payments may change over time |
| 7/1 ARM |
May qualify for higher loan amounts |
Potential for higher payments if rates increase |
| 5/1 ARM |
30 year term, no balloon payment |
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| 3/1 ARM |
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| 1 year ARM |
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| 6 month ARM |
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| 1 month ARM |
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| Loan Program |
Advantages |
Disadvantages |
| Balloon Mortgages |
Lower initial monthly payment |
Risk of rates being higher at the end of the initial fixed period |
| 7 year |
Lower payment for a predetermined period of time |
Risk of foreclosure if you cannot make balloon payment, refinance, or exercise the conversion option |
| 5 year |
Many balloon mortgages offer the option to convert to a new loan after the initial term |
Balloon payment requires you to sell or refinance after the term, as opposed to a 7/1 or 5/1 program with a 30 year term |
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| Loan Program |
Advantages |
Disadvantages |
| First Time Buyer Programs |
Lower down payment |
May be subject to income and property value limitations |
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Easier to qualify |
Some government subsidized programs may generate a recapture tax if you sell the house too soon |
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Lower rates may be available |
Education courses may be required to qualify for these loans |
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| Loan Program |
Advantages |
Disadvantages |
| Stated Income Programs |
Don't need to verify income |
Higher rates |
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Faster approval |
Higher down payment |
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Good for borrowers who may not qualify with a full income documentation program |
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| Loan Program |
Advantages |
Disadvantages |
| Interest Only Programs |
You have several payment options |
Higher rates |
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Lower monthly payments |
Principal loan balance will not decrease during the interest only payment period |
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Qualify for a higher loan amount |
Payment will be higher for the remaining term |
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Qualify at the interest only payment |
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Option to pay the full normal payment |
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Interest only payments for up to ten years |
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| Loan Program |
Advantages |
Disadvantages |
| No point, No fee Programs |
No out-of-pocket loan costs at closing |
Higher rates |
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Closing costs are paid from the lender rebate |
Higher payments |
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Less money required to close |
Some lenders may have a short payoff penalty which is usually charged to the loan broker, but may be passed on to you |
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Refinance without increasing your loan amount |
Some require a prepayment penalty for the first one to five years |
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| Loan Program |
Advantages |
Disadvantages |
| Imperfect Credit Programs |
Potential for reestablishing credit if you pay your mortgage on time |
Higher rates |
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When used for debt consolidation, you may be able to reduce your monthly debt payment |
Terms may not be as favorable |
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Harder to get long-term fixed loans |
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Loans may have prepayment penalties |
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| Loan Program |
Advantages |
Disadvantages |
| Home Equity Line of Credit |
You only borrow what you need |
Rates can change. The maximum interest rate can be relatively high |
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Pay interest only on what you borrow |
Payments can change |
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Flexible access to funds |
Harder to refinance your first mortgage |
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Interest may be tax deductible |
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May be free of closing costs |
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A good source for an emergency fund, if set up in advance |
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Can be used for debt consolidation and lower payments |
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Rates are usually lower than consumer loan or credit card rates |
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| Loan Program |
Advantages |
Disadvantages |
| Home Equity Fixed Loan |
Fixed payments |
Higher interest rates compared to first mortgage |
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Interest may be tax deductible |
Harder to refinance your first mortgage |
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Get cash out for any purpose |
Interest is paid on the entire loan amount, compared to an equity line of credit |
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| In addition to our standard loan programs, you may benefit by obtaining one of our many special programs: |
| ·Purchase your home with no down payment using Private Mortgage Insurance (PMI) or Lender-paid Mortgage Insurance (MI). |
| ·Piggyback loans: 80-10-10 or 80-15-5. Avoid PMI payments by using Lender-paid MI. |
| ·Debt consolidation programs. |
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| ·Home Improvement and new construction loans. |
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| ·Refinance programs. |
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| ·Reverse mortgages (must be 62+ years of age). |
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·You may qualify even if you've been turned down before!
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