mortgages | calculator | rates | glossary | types

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