Loan Programs Explained

• 1-3  

• 3/1 ARM, 1 yr ARM, 6 mth ARM

• 3-5

• 5/1 ARM

• 5-7

• 7/1 ARM

• 7-10

• 10/1 ARM, 30 yr fixed, 15 yr fixed

• 10+

• 30 yr fixed or 15 yr fixed

Loan Program Details

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 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

Loan Program
5 Year & 7 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 balloon payment or if you cannot refinance or if you cannot exercise the conversion option

First Time Buyer Programs

Advantages

• Lower down payment
• Easier to qualify
• Sometimes you may get lower rate

• 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 Programs

• Don't need to verify income
• Faster approval

• Higher rates
• Higher down payment

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 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 Line of Credit

• You only borrow what you need

• Pay interest only on what you borrow

• Flexible access to funds

• Interest may be tax deductible

• Rates can change. The maximum interest rate is normally 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 your first mortgage