Loan Programs |
Advantages |
Disadvantages |
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30 year fixed
15 year fixed
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Monthly payments are fixed over the life of the loan. |
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Interest rate does not change |
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Protected if rates go up |
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Can refinance if rates go down | |
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Higher interest rate |
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Higher mortgage payments |
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Rate does not drop if interest rates improve | |
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Adjustable Rate Mortgages
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6month ARM
1 month ARM
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Lower initial monthly payment |
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Lower payment over a shorter period of time |
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Rates and payments may go down if rates improve |
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May qualify for higher loan amounts | |
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More risk |
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Payments may change over time |
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Potential for high payments if rates go up | |
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Lower initial monthly payment |
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Lower payment over a shorter period of time |
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Many balloon mortgages offer the option to convert to a new loan after the initial term. | |
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Risk of rates being higher at the end of the initial fixed period |
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Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option | |
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Lower down payment |
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Easier to qualify |
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Sometimes you may get lower rates | |
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May be subject to income and property value limitations |
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Some programs which have government subsidies may have a recapture tax if you sell the house too early. | |
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Don't need to verify income |
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Faster approval | |
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Higher rates |
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Higher down payment | |
Equal Housing Lender |