Loan Programs

Which loan is right for me?

Years you plan to stay in the home	Recommended program
1-3 years	3/1 ARM, 1 year ARM or 6 month ARM
3-5 years	5/1 ARM
5-7 years	7/1 ARM
7-10 years	10/1 ARM, 30 year fixed or 15 year fixed
10+ years	30 year fixed or 15 year fixed

Loan Program	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 rates go up Can refinance if rates go down	Higher interest rate Higher mortgage payments Rate does not drop if interest rates improve

Loan Program	Advantages	Disadvantages
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	Lower initial monthly payment Rates and payments may go down if rates improve May qualify for higher loan amounts 30 year term, no balloon payment	More risk Payments may change over time Potential for higher payments if rates increase

Loan Program	Advantages	Disadvantages
Balloon Mortgages 7 year 5 year	Lower initial monthly payment Lower payment for a predetermined 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, refinance, or exercise the conversion option Balloon payment requires you to sell or refinance after the term, as opposed to a 7/1 or 5/1 program with a 30 year term

Loan Program	Advantages	Disadvantages
First Time Buyer Programs	Lower down payment Easier to qualify Lower rates may be available	May be subject to income and property value limitations Some government subsidized programs may generate a recapture tax if you sell the house too soon Education courses may be required to qualify for these loans

Loan Program	Advantages	Disadvantages
FHA Programs	Direct FHA lender Faster approval Lower Down Payments Streamline Loans	Lower Loan Sizes Mortgage Insurance Required

Loan Program	Advantages	Disadvantages
Interest Only Programs	You have several payment options Lower monthly payments Qualify for a higher loan amount Qualify at the interest only payment Option to pay the full normal payment Interest only payments for up to ten years	Higher rates Principal loan balance will not decrease during the interest only payment period Payment will be higher for the remaining term

Loan Program	Advantages	Disadvantages
No point, No fee Programs	No out-of-pocket loan costs at closing Closing costs are paid from the lender rebate Less money required to close Refinance without increasing your loan amount	Higher rates Higher payments Some lenders may have a short payoff penalty which is usually charged to the loan broker, but may be passed on to you Some require a prepayment penalty for the first one to five years

Loan Programs	Advantages
USDA (rural Housing)	Low Down Payments Low Rates	Loan Size