Years you plan to stay in the house

Recommended Program

1-3

3/1, 1 year or 6 month ARM, Interest only loan

3-5

5/1 ARM, Interest only loan

5-7

7/1 ARM

7-10

10/1 ARM, 30 year fixed or 15 year fixed

10+

30 year fixed or 15 year fixed

Loan 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 rates go up
• Can refinance if rates go down

• Higher interest rates than ARM loans
• Higher mortgage payments than ARM loans
• Rate does not drop if interest rates improve

Adjustable Rate Mortgages

1 year ARM

3/1 ARM

5/1 ARM

7/1 ARM

10/1 ARM

6 month ARM

Interest Only

• 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
• Some FTHB programs offer 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

Stated Income and No Documentation Programs

• Don´t need to verify income
• Fast approval

• Higher rates
• Higher down payment

No point, No fee Programs

• No closing costs
• Less money required to close

• Higher rates
• Higher payments

Imperfect Credit Programs

• Potential for reestablishing credit if you pay your mortgage on time
• When used for debt consolidation, you may be able to reduce your monthly debt payment

• Higher rates
• Terms may not be as favorable
• Harder to get long term fixed loans
• Loans may have prepayment penalties

Home Equity Line of Credit

• You only borrow what you need
• Pay interest only on what you borrow
• Flexible access to funds
• Interest may be tax deductible

• Rates can change. The maximum interest rate is normally high
• Payments can change
• Harder to refinance your first mortgage

Home Equity Fixed Loan

• Fixed payments
• Interest may be tax deductible

• Higher interest rates than on 1^st mortgages
• Harder to refinance your first mortgage

Ask about these special loan programs

designed to serve your needs

• Buy your home with NO MONEY DOWN
• USDA, FHA and VA government financing
• No PMI payments even with 5% or 10% down
• Debt consolidation programs
• Home improvement loans
• Investment loans
• Construction to permanent financing
• Bankruptcy buy outs with 12 months of on time BK payments
• NC bond loans