| Loan Program | Advantages | Disadvantages |
Fixed Rate Mortgages
- 30 year fixed
- 15 year fixed
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- 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
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- Higher interest rate
- Higher mortgage payments
- Rate does not drop if interest rates improve
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| Loan Program | Advantages | Disadvantages |
Adjustable Rate Mortgages (ARM)
- 10/1 ARM
- 7/1 ARM
- 5/1 ARM
- 3/1 ARM
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- Lower initial monthly payment, typically fixed for the 3 to 10 years (3/1 ARM has a fixed rate (and payment) for the first 3 years).
- Rates and payments may go down if rates improve
- 30 year term, no balloon payment
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- Payments will change over time once the rate starts adjusting
- Potential for higher payments if rates increase
- More risk if higher loan payments cannot be handled when rate adjusts
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| Loan Program | Advantages | Disadvantages |
| Balloon Mortgages
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- Lower payment for a predetermined period of time
- Many balloon mortgages offer the option to convert to a new loan after the initial term
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- Risk of foreclosure if you cannot make balloon payment, refinance, or exercise the conversion option
- Balloon payment requires you to sell or refinance after the term, as opposed to a 7/1 or 5/1 ARM program with a 30 year term
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| Loan Program | Advantages | Disadvantages |
| First Time Buyer Programs |
- Lower down payment
- Easier to qualify
- Lower rates may be available
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- May be subject to income and property value limitations
- Some government subsidized programs may generate a recapture tax if you sell the house too soon
- 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
- Faster approval
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- Higher rates
- Higher down payment
- No longer available from many lenders; most will do for jumbo loans only (>$417k)
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| Loan Program | Advantages | Disadvantages |
| Interest Only Programs |
- Lower monthly payments
- Option to pay the full normal payment
- Interest only payments for up to ten years
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- Higher rates
- Principal loan balance will not decrease during the interest only payment period
- Payment will be higher for the remaining term
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