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Loan Solutions - Advantages & Disadvantages

Years you plan to stay in the house

Recommended program
1-3
3/1 ARM, 1 year ARM or 6 month ARM
3-5
5/1 ARM
5-7
7/1 ARM
7-10
10/1 ARM, 30 yr fixed or 15 yr fixed
10+
30 year fixed or 15 year fixed

Loan Program
Advantages
Disadvantages
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
· Lower initial monthly payment
· Lower payment over a shorter period of 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
· Lower initial monthly payment
· Lower payment over a shorter 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 or if you cannot refinance or if you cannot exercise the conversion option
   
First Time Buyer Programs
· Lower down payment
· Easier to qualify
· Sometimes you may get lower rate
· 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 down payment
   
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 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
· Rates can change. The maximum interest rate is 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 your first mortgage
   
Besides our standard loan programs, we also have a large number of unique programs to serve your needs.
 
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