First Time Buyer Programs Advantages: – Lower down payment – Easier to qualify – Sometimes you may get lower rate Disadvantages: – 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.
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Balloon Mortgages 7 year 5 year Advantages: – 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. Disadvantages: – Risk of rates being higher at the end of the initial fixed period – Risk [...]
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Adjustable Rate Mortgages 10/1 ARM 7/1 ARM 3/1 ARM 1 year ARM 6 month ARM 1 month ARM Advantages: – 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 Disadvantages: – More risk – [...]
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Fixed Rate Mortgages 30 year fixed 15 year fixed Advantages: – 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 Disadvantages: – Higher interest rate – Higher mortgage payments – Rate does not drop if [...]
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Home Equity Line of Credit Advantages: – You only borrow what you need – Pay interest only on what you borrow – Flexible access to funds – Interest may be tax deductible Disadvantages: – Rates can change. The maximum interest rate is normally high. – Payments can change – Harder to refinance your first mortgage
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