Any Questions?Explore Your Loan Options

Here are some guidelines to help you understand the different loan options that may be available to you and to assist you in choosing the best loan for your particular needs.

1. Which loan program is right for you?

Years you plan to stay in your 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

2. What are the advantages and disadvantages of different loan programs?

Loan Programs Advantages Disadvantages
Fixed Rate Mortgages
30 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 payments
Rate does not drop if interest rates improve
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
Balloon Mortgages
7 year
5 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 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.
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

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