LOAN PROGRAMS It's not always
how long you plan to stay in your home, but how
long you plan to stay in your loan.
Some reasons why you may change your loan: lower
rate, relocation, new baby, marriage, new job,
divorce.
Which
loan is right for my situation?
Years
you plan to stay in the loan
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
Fixed
Rate Mortgages
Loan Programs
Advantages
Disadvantages
30 year
fixed
20 year fixed
15 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 payment
Rate does not drop if interest rates
improve
Adjustable
Rate Mortgages
Loan Programs
Advantages
Disadvantages
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 change in payments if rates
go up
No
point, No fee Programs
Advantages
Disadvantages
Less
closing costs
Less money required to close
Slightly
higher rates
Higher payments
Imperfect
Credit Programs
Advantages
Disadvantages
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
Loans may have prepayment penalties
Home
Equity Line of Credit
Advantages
Disadvantages
You
only borrow what you need
Pay interest only on what you borrow
Flexible access to funds
Interest may be tax deductible
Similiar to credit card
Payments
can change
First
Time Buyers Programs
Advantages
Disadvantages
Lower
down payment
Easier to qualify
Sometimes you may get a 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.
