| Choosing
the right mortgage for your lifestyle could have substantial
impact on your retirement, your net worth, and your family's
future lifestyle. It is critical that you choose a loan program
that fits your needs as well as your future goals.
Fixed Rate Mortgages |
|
|
|
Advantages |
Disadvantages |
| 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 |
|
|
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
|
- Payments
may change over time
- Potential
for high payments if rates go up
|
|
|
| Balloon
Mortgages |
|
|
Advantages |
Disadvantages |
| 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 |
|
|
Advantages |
Disadvantages |
| |
- 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 |
|
|
Advantages |
Disadvantages |
| |
- Don’t
need to verify income
- Faster
approval
|
- Higher
rates
- Higher
down payment
|
|
|
| No
point, No fee Programs |
|
|
Advantages |
Disadvantages |
| |
- No
closing costs
- Less
money required to close
|
- 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
- Harder
to get long term fixed loans
- 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
|
- Rates
can change. The maximum interest rate is normally high.
- Payments
can change
- Harder
to refinance your first mortgage
|
|
|
| Home
Equity Fixed Loan |
|
|
Advantages |
Disadvantages |
| |
- Fixed
payments
- Interest
may be tax deductible
|
- Higher
interest rates than on 1st mortgages
- Harder
to refinance your first mortgage
|
