Loan Programs

Which loan is right for me?

Years you plan to stay in home	Best program
1-3 3-5 5-7 7-10 10+	3/1 ARM, 1 year ARM or 6 month ARM 5/1 ARM 7/1 ARM 10/1 ARM, 30 year fixed or 15 year fixed 30 year fixed or 15 year fixed

Program	Pros	Cons
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 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 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 Buyers	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 payments
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 EquityLine 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, max rates are 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 1st mortgage