Loan
Type |
Pros |
Cons |
30
Year Fixed |
Monthly
payment never changes during life of loan. |
Interest
rate higher than adjustable or semi-fixed loans. |
15
Year Fixed |
Lower interest
rate than 30 Year Fixed. Fixed monthly payment and quick payoff
period. Own your own home fast! |
Monthly
payment is markedly higher than the 30 Year Fixed. |
10
Year ARM |
Enjoy fixed
monthly payment for 10 Years before loan converts to adjustable
for remaining 20 Years. Interest rate is about _% lower than
30 Year Fixed. |
|
7
Year Fixed |
Fixed for
7 years then converts to adjustable for remaining 23 years. |
|
5
Year Fixed |
Fixed for
5 years then converts to adjustable for remaining 25 years. |
Loans 5
years and less can go by quickly and may have to refinance if
planning on long term tenancy in home. |
3
Year Fixed |
Fixed for
3 years then converts to adjustable for remaining 27 years. |
Loans 3
years and less can go by quickly and may have to refinance if
planning on long term tenancy in home. |
1
Year/6 Mos.
Adjustables |
Good for
short term hold properties. Lowest interest rates available. |
Loans 1year
and less can go by quickly and may have to refinance if planning
on long term tenancy in home. |
Option
ARMS
Pick-a-Payment Loans
Negative Amortization |
Offer as
low as 1% Payment Rate makes home ownership as easy as possible.
First 5 years guaranteed by the low payment rate. |
Your payment
rate does not cover the full amount of interest owed. Your loan
balance will therefore increase. Your interest rate adjusts
monthly. |
Interest
Only Loans |
This is
an “option” on all loans here. This allows a lower
monthly payment as you may elect to forego paying down your
principal balance monthly. |
Your principal
amount borrowed will not reduce. |
40
Year Term |
Allows
you to lower your monthly payment by stretching the loan to
a 40 year term. |
Longer
term means more total dollars out of your pocket in the long
run, but good for a tight budget buyer. |
