| Loan
Programs |
Advantages |
Disadvantages |
| Fixed
Rate Mortgages |
40 year fixed
30
year fixed
20 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 |
2/28 ARM
3/27 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 |
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
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.
|
|
USDA |
| |
- Minimum credit score 620
- No money down
- No monthly PMI
|
- Maximum income limitations.
|
