Loan Programs
| How long do you plan to stay in your home? | Recommended program | ||||
| 1-3 years | 3/1 ARM, 1 year ARM or 6 month ARM | ||||
| 3-5 years | 5/1 ARM | ||||
| 5-7 years | 7/1 ARM | ||||
| 7-10 years | 10/1 ARM, 30 year fixed or 15 year fixed | ||||
| 10+ years | 30 year fixed or 15 year fixed | ||||
| 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 | |||
| Can refinance if rates go down | |||||
| 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 | ||||
| 3/1 ARM | |||||
| 1 year ARM | |||||
| 6 month ARM | |||||
| 1 month ARM | |||||
| 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 | |||
| Loan Program | Advantages | Disadvantages | |||
| First Time Buyer Programs | Lower down payment | May be subject to income and property value limitations | |||
| Easier to qualify | Some government subsidized programs may generate a recapture tax if you sell the house too soon | ||||
| Lower rates may be available | Education courses may be required to qualify for these loans | ||||
| Loan Program | Advantages | Disadvantages | |||
| Stated Income Programs | Don't need to verify income | Higher rates | |||
| Faster approval | Higher down payment | ||||
| Good for borrowers who may not qualify with a full income documentation program | |||||
| Loan Program | Advantages | Disadvantages | |||
| Interest Only Programs | You have several payment options | Higher rates | |||
| Lower monthly payments | Principal loan balance will not decrease during the interest only payment period | ||||
| Qualify for a higher loan amount | Payment will be higher for the remaining term | ||||
| Qualify at the interest only payment | |||||
| Option to pay the full normal payment | |||||
| Interest only payments for up to ten years | |||||
| Loan Program | Advantages | Disadvantages | |||
| No point, No fee Programs | No out-of-pocket loan costs at closing | Higher rates | |||
| Closing costs are paid from the lender rebate | Higher payments | ||||
| 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 | ||||
| Refinance without increasing your loan amount | Some require a prepayment penalty for the first one to five years | ||||
| Loan Program | Advantages | Disadvantages | |||
| Imperfect Credit Programs | Potential for reestablishing credit if you pay your mortgage on time | Higher rates | |||
| When used for debt consolidation, you may be able to reduce your monthly debt payment | Terms may not be as favorable | ||||
| Harder to get long-term fixed loans | |||||
| Loans may have prepayment penalties | |||||
| 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 | |||
| Pay interest only on what you borrow | Payments can change | ||||
| Flexible access to funds | Harder to refinance your first mortgage | ||||
| Interest may be tax deductible | |||||
| May be free of closing costs | |||||
| A good source for an emergency fund, if set up in advance | |||||
| Can be used for debt consolidation and lower payments | |||||
| Rates are usually lower than consumer loan or credit card rates | |||||
| Loan Program | Advantages | Disadvantages | |||
| Home Equity Fixed Loan | Fixed payments | Higher interest rates compared to first mortgage | |||
| Interest may be tax deductible | Harder to refinance your first mortgage | ||||
| Get cash out for any purpose | Interest is paid on the entire loan amount, compared to an equity line of credit | ||||
| 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. | |||||
| ·Home Improvement and new construction loans. | |||||
| ·Refinance programs. | |||||
| ·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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