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30 and 15 year fixed rate
Advantages:
- Payments never change
-
Interest rate never changes
-
Protected if rates go up
- Can refinance if rates go down
Disadvantages:
- Higher interest rate
- Higher monthly payments
-
% does not change if rates go down
(Preferred loan if you plan to live in a home for 7 years or more.)
Adjustable Rate Mortgages
Advantages:
- Lower initial monthly payment
- Lower payment for short period of time
- Rates & payment may go down
- May qualify for higher loan amount
Disadvantages:
- Greater risk
- Payments may change with time
- Potential higher payments with interest rate increase
Balloon Mortgages
Advantages:
- Lower initial monthly payment
- Lower payment for short period of time
- Rates & payment may go down
- May qualify for higher loan amount
Disadvantages:
- Risk rates being higher when balloon is due
- Risk of foreclosure if you cannot make balloon payment
First Time Buyers
Advantages:
- Lower down payment
- Easier to qualify
- May get lower rates
Disadvantages:
- May be subject to income & value limits
- Some programs which have government subsidies may have a recapture tax if you sell the home too early
Stated income programs
Advantages:
- Don't need to verify income
- Faster approval
Disadvantages:
- Higher rates
- Higher down payment
No point, No fee program
Advantages:
- No closing costs
- Less money needed to close
Disadvantages:
- Higher Rates
- Higher Payments
Imperfect credit programs
Advantages:
- Potential for reestablishing credit
- May be able to reduce monthly debt payment if used for debt consolidation
Disadvantages:
- Higher rates
- Less favorable terms
- harder to get long term fixed rate
- May have prepayment penalty
Home equity line of credit
Advantages:
- You only borrow what is needed
- Pay interest only on amount borrowed
- Flexible access to funds
- Interest may be tax deductible
Disadvantages:
- Rates can change
- Payments can change
- Harder to refinance your first mortgage
Home equity fixed loan
Advantages:
- Fixed payments
- Interest may be tax deductible
Disadvantages:
- Higher interest rates that on 1st loan
- Harder to refinance 1st mortgage
Other loans that are available:
- Purchase a house with 0 down payment
- Piggyback loans (80-10-10 or 80-15-5). Owner carries 10 or 15% second trust deed. No PMI payments.
- Debt consolidation programs
- Home improvement loans
- Construction loans
30 and 15 year fixed rate
Advantages:
- Payments never change
-
Interest rate never changes
-
Protected if rates go up
- Can refinance if rates go down
Disadvantages:
- Higher interest rate
- Higher monthly payments
-
% does not change if rates go down
(Preferred loan if you plan to live in a home for 7 years or more.)
Adjustable Rate Mortgages
Advantages:
- Lower initial monthly payment
- Lower payment for short period of time
- Rates & payment may go down
- May qualify for higher loan amount
Disadvantages:
- Greater risk
- Payments may change with time
- Potential higher payments with interest rate increase
Balloon Mortgages
Advantages:
- Lower initial monthly payment
- Lower payment for short period of time
- Rates & payment may go down
- May qualify for higher loan amount
Disadvantages:
- Risk rates being higher when balloon is due
- Risk of foreclosure if you cannot make balloon payment
First Time Buyers
Advantages:
- Lower down payment
- Easier to qualify
- May get lower rates
Disadvantages:
- May be subject to income & value limits
- Some programs which have government subsidies may have a recapture tax if you sell the home too early
Stated income programs
Advantages:
- Don't need to verify income
- Faster approval
Disadvantages:
- Higher rates
- Higher down payment
No point, No fee program
Advantages:
- No closing costs
- Less money needed to close
Disadvantages:
- Higher Rates
- Higher Payments
Imperfect credit programs
Advantages:
- Potential for reestablishing credit
- May be able to reduce monthly debt payment if used for debt consolidation
Disadvantages:
- Higher rates
- Less favorable terms
- harder to get long term fixed rate
- May have prepayment penalty
Home equity line of credit
Advantages:
- You only borrow what is needed
- Pay interest only on amount borrowed
- Flexible access to funds
- Interest may be tax deductible
Disadvantages:
- Rates can change
- Payments can change
- Harder to refinance your first mortgage
Home equity fixed loan
Advantages:
- Fixed payments
- Interest may be tax deductible
Disadvantages:
- Higher interest rates that on 1st loan
- Harder to refinance 1st mortgage
Other loans that are available:
- Purchase a house with 0 down payment
- Piggyback loans (80-10-10 or 80-15-5). Owner carries 10 or 15% second trust deed. No PMI payments.
- Debt consolidation programs
- Home improvement loans
- Construction loans
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