| Mortgage Programs | Benefits | Drawbacks |
Fixed Rate Mortgages
- 15 year fixed
- 20 year fixed
- 30 year fixed
- 40 year fixed
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- The mortgage monthly payments will be fixed for the life of the loan
- Your interest rate will not change
- You are protected if interest rates should rise
- You can refinance if the interest rates should drop
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- Interest rates are slightly higher
- Your mortgage payments will be higher
- Your rate will not drop if the interest rates drop
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| Mortgage Programs | Benefits | Drawbacks |
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
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- Lower monthly payment during the initial term
- The rates and payments may drop if rates drop
- You may qualify for a higher Mortgage
- You will have a 30 year term, and usually no balloon payment
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- Greater risk
- Your payments may rise over time
- There is a potential for your payments to increase if the interest rates should increase
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| Mortgage Programs | Benefits | Drawbacks |
| 30 Year Balloon Mortgages
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- Lower payments during the initial term
- A lower mortgage payment for a the predetermined term
- Most balloon mortgages offer you the option to extend the mortgage after the initial term under certain conditions and with a one time interest rate change based on a pre-determined formula after the initial term
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- There is a risk that rates will be higher at the end of the initial fixed rate term
- There is a risk of foreclosure if at the end of the initial term you are unable to make the balloon payment, refinance, or exercise the option to extend your mortgage
- You may have to sell or refinance the property if you are unable extend the mortgage when the balloon comes due as opposed to a 7/1 or 5/1 ARM program with a 30 year term
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| Mortgage Programs | Benefits | Drawbacks |
| First Time Buyer Programs |
- Allows a lower down payment
- It is easier to qualify
- Special lower rates may be available
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- The loan may be subject to income and property value limitations
- If your loan is government subsidized you may generate a recapture tax if you sell the home too soon
- A special education class may be required in order to qualify for these mortgages
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| Mortgage Programs | Benefits | Drawbacks |
| Stated Income Programs |
- You will not have to verify your income
- Faster approval
- This program is useful for borrowers who may not be able to document all of their income or who have complex income tax returns
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- Your interest rate will be higher
- Your down payment may be higher
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| Mortgage Programs | Benefits | Drawbacks |
| Interest Only Programs |
- You can pay interest only or you can pay extra toward the principal balance
- Your monthly payments will be lower
- You may qualify for a higher mortgage amount
- You will be qualified based on the interest payment
- You have the option to pay more than the interest payment
- The minimum interest only payments are for the first 10 years
- Use the extra monthly cash flow for investments
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- The interest rates are slightly higher
- The principal balance will not go down unless you pay more than the minimum interest payment
- At the end of the 10 years the payment on the remaining balance will be increased to pay off the loan over the remaining 20 years
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| Mortgage Programs | Benefits | Drawbacks |
| No Cost Mortgages |
- You pay no mortgage closing costs at closing except the prepaid expenses
- The mortgage is not increased to cover the closing costs
- The closing costs are paid by the lender from the higher price he receives when he sells a mortgage that has a higher interest rate
- You need less money to close your loan
- You can refinance your mortgage without increasing loan amount
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- You will have a higher interest rate
- You will have higher mortgage payments
- You may have to pay a penalty if you refinance or pay off the loan in less than 4 to 12 months
- Some loans will have a prepayment penalty during the first one to five years
- You will have to pay the prepaid expenses at closing: (the prepaid interest for the balance of the first month and the amount needed to fund your escrow account for real estate taxes and insurance)
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| Mortgage Programs | Benefits | Drawbacks |
| Programs For Poor Credit |
- You have the opportunity to reestablish your credit if you make your mortgage payments on time
- If also used to pay down credit cards you should be able to improve your monthly cash flow
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- The interest rates are higher
- The terms of the loan may not be as favorable
- The loans may not have long term fixed interest rates
- The mortgages may have prepayment penalties
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| Mortgage Programs | Benefits | Drawbacls |
| Home Equity Line of Credit (HELOCS) |
- You only draw what you need from time to time
- You only pay interest on the amount that you have drawn
- You can draw from the account by writing a check and in some cases from an ATM machine
- The interest may be tax deductible whereas the interest on consumer debt is not tax deductible
- The loan may have no closing costs or low closing costs
- It is a good emergency fund, if you have set it up in advance
- It can be used to pay off credit cards or other debts and reduces the need for reserve funds in your checking account
- The interest rates are usually lower than the rates on your consumer debt or credit cards
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- The rates can increase if the bank Prime Rate increases
- The payments will increase if the interest rate increases
- It may be harder to refinance your first mortgage if the total of your first mortgage and the HELOC exceed 95% of the value of your Home
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| Mortgage Programs | Benefits | Drawbacks |
| Second Mortgage Loan |
- The interest and payments are fixed for the life of the loan
- The interest may be tax deductible
- You can get cash out at closing for any purpose
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- The interest rates will be higher than a first mortgage
- It may become harder to refinance your first mortgage
- The payments are based on the original loan amount, as compared to the changing payments based on the changing balance of a HELOC
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