| Programs |
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 interest rates increase
• Refinance if interest rates decrease |
•
Higher interest rate
• Higher mortgage payments
• Rate does not drop if interest rates improve |
Adjustable Rate Mortgages
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month 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 increase
|
| First Time Buyer |
•
Lower down payment
• Easier to qualify
• May get lower rates |
•
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. |
