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Which Loan is Right for me? | Years you plan to stay in the home | Recommended program |
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| 1-3 years | 3/1 ARM, 1 year ARM or 6 month ARM | | 3-5 years | 5/1 ARM | | 5-7 years | 7/1 ARM | | 7-10 years | 10/1 ARM, 30 year fixed or 15 year fixed | | 10+ years | 30 year fixed or 15 year fixed |
| Loan Program | Advantages | Disadvantages |
|---|
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
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| | Loan Program | Advantages | Disadvantages |
|---|
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
- Rates and payments may go down if rates improve
- May qualify for higher loan amounts
- 30 year term, no balloon payment
| - More risk
- Payments may change over time
- Potential for higher payments if rates increase
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| | Loan Program | Advantages | Disadvantages |
|---|
| Balloon Mortgages | - 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
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| | Loan Program | Advantages | Disadvantages |
|---|
| 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
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| | Loan Program | Advantages | Disadvantages |
|---|
| 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
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| | Loan Program | Advantages | Disadvantages |
|---|
| 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
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| | Loan Program | Advantages | Disadvantages |
|---|
| 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
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| | Loan Program | Advantages | Disadvantages |
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| 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
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| | Loan Program | Advantages | Disadvantages |
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| 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 mortgage
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| | Loan Program | Advantages | Disadvantages |
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| Home Equity Fixed Loan | - Fixed payments
- Interest may be tax deductible
- Get cash out for any purpose
| - Higher interest rates compared to first mortgage
- Harder to refinance your first mortgage
- Interest is paid on the entire loan amount, compared to an equity line of credit
| In addition to our standard loan programs, you may benefit by obtaining one of our many special programs: - Purchase your home with no down payment.
- Piggyback loans: 80-10-10 or 80-15-5. Avoid PMI payments.
- Debt consolidation programs.
- Home Improvement loans.
- You may qualify even if you've been turned down before!
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