| Loan Programs |
Advantages |
Disadvantages |
|
| Adjustable Rate Mortgage (ARM) |
6 month ARM
12 month ARM |
- Six and twelve month ARMs can significantly
lower a mortgage payment for six or twelve months. That can be
enough time to catch up on other debt payments and improve your
credit rating.
|
- Six and twelve month ARMs can become expensive after the initial
six or twelve month introductory period. Chances are, you'll want
to improve
your credit and obtain a better loan.
|
|
| Fixed Rate Mortgages |
2 year fixed
3 year fixed |
- Two and three year fixed rate mortgages provide the security
of a fixed loan payment and relatively low, fixed interest rate
for the first
two or three years. For most people trying to improve their credit,
two to three years is plenty of time. After two or three years,
these loans
convert to ARM loans.
|
- Two and three year fixed rate mortgages convert to ARM loans
at the end of the fixed rate period. Rates on ARMs can increase.
Chances
are, you'll want to improve your credit and obtain a different
loan before the two or three years are up.
|
|
| Fixed Rate Mortgages |
15 year fixed
30 year fixed |
- Fixed monthly payment and rate protect against interest and
monthly payment increases
|
- Higher interest rate compared to ARM introductory rates
- Higher rate compared to two and three year, fixed rate loans
- Fifteen and thirty year loans should generally be obtained if you plan not to move or refinance in the foreseeable future. If you're trying to improve your credit in anticipation of refinancing for a lower-rate loan, consider avoiding these loans.
|
|
| Private Investor Loans |
| (Hard money) |
- Fast close
- Less "red tape"
- Easy qualification guidelines
|
- Higher interest rate
- Higher loan fee
|
|
| Credit Advantage Loans |
ONCE GOOD CREDIT IS ESTABLISHED
(OR REESTABLISHED),
THESE LOANS ARE AVAILABLE |
| Loan Programs |
Advantages |
Disadvantages |
| Adjustable Rate Mortgages |
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month ARM
2/28: 2 yr. fixed rate; 28 yr. ARM
1 month ARM
|
- 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 |
15 year (30 yr. fixed, due in 15)
7 year
5 year |
- 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 the balloon payment,
refinance or exercise the conversion option
|
|
| No or Stated Income/Asset Programs |
| |
- No tax returns or W-2s
- No proof of assets or down payment
- No verification of income
- Fast approval
|
- Higher rates
- Higher down payment
|
|
| No point, No fee Programs |
| |
- No closing costs
- Less money required to close
|
- Higher rates
- Higher payment
|
|
| Home Equity Line of Credit |
| |
- You only borrow what you need
- Pay interest only on what you borrow
- Access to funds as needed
- Interest may be tax deductible
- Up to 125% loan-to-value
|
- Rates can change. The maximum interest rate is normally high
- Payments can change
- Harder to refinance your first mortgage
|
| Home Equity Fixed Loans |
| |
- Fixed payments
- Receive one lump sum at closing
- Interest may be tax deductible
|
- Higher interest rates compared to 1st
mortgages
- Harder to refinance your first mortgage
|
