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
• Loss of Liquidity
• Paying for Rate Lock for longer than will be needed

Adjustable Rate Mortgages (ARM)

• 10/1 ARM
• 7/1 ARM
• 5/1 ARM
• 3/1 ARM
• 1 year ARM
• 6 month ARM
• 1 month ARM

• Lower initial monthly payment
• Increased Liquidity
• Rates and payments may go down if rates improve
• May qualify for higher loan amounts
• 30 year term, no balloon payment

• Payments may change over time
• Potential for higher payments if rates increase

Balloon Mortgages

• 7 year
• 5 year

• Lower initial monthly payment
• Lower payment for a predetermined 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, 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 program with a 30 year term

First Time Buyer Programs

• Lower down payment
• Easier to qualify
• Lower rates may be available

• 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

Stated Income Programs

• Don't need to verify income
• Faster approval
• Good for borrowers who may not qualify with a full income documentation program

• Higher rates
• Higher down payment

Interest Only Programs

• You have several payment options
• Lower monthly payments
• Qualify for a higher loan amount
• Qualify at the interest only payment
• Option to pay the full normal payment
• Interest only payments for up to ten years

• Higher rates
• Principal loan balance will not decrease during the interest only payment period
• Payment will be higher for the remaining term

No point,

No fee Programs

• No out-of-pocket loan costs at closing
• Closing Costs are paid from the lender rebate
• Less money required to close
• Refinance without increasing your loan amount

• Higher rates
• Higher payments
• Some Lenders may have a short payoff penalty which is usually charged to the loan broker, but may be passed on to you
• Some require a prepayment penalty for the first one to five years

Imperfect Credit Programs

• Potential for reestablishing credit if you pay your Home Loan 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
• May be free of Closing Costs
• A good source for an emergency fund, if set up in advance
• Can be used for debt consolidation and lower payments
• Rates are usually lower than consumer loan or Credit Card rates

• Rates can change. The maximum interest rate can be relatively high
• Payments can change
• Harder to Refinance your first Home Loan
• Rate is tied to the Prime Rate

Home Equity Fixed Loan

• Fixed payments
• Interest may be tax deductible
• Get cash out for any purpose

• Higher interest rates compared to first Home Loan
• Harder to Refinance your first Home Loan
• Interest is paid on the entire loan amount, compared to an Equity Line of Credit