|
Years You Plan to Stay in the House
|
|
Recommended Program
|
|
1-3
|
|
3/1 ARM, 1 year ARM or 6 month ARM |
|
3-5
|
|
5/1 ARM |
|
5-7
|
|
7/1 ARM |
|
7-10
|
|
10/1 ARM, 30 year fixed or 15 year fixed |
|
10+
|
|
30 year fixed or 15 year fixed |
|
|
|
|
Loan Programs
|
Advantages
|
Disadvantages
|
| Fixed Rate Mortgages |
|
|
30 year Fixed
|
- 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
|
|
|
15 year Fixed
|
|
| 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
|
| 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 you sell the house too early.
|
| 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
|
| Commercial Loans |
|
- Small commercial loans available
- $100,000 to $1,000,000
- Stated income/Stated asset
- Available in all 50 states
|
|
