Fixed Rate Mortgages Programs  

• 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 interest rates improve

• Advantages:
  • 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  
• Disadvantages
  • More risk
  • Payments may change over time
  • Potential for higher payments if rates

• Advantages:
  • 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  
• Disadvantages
  • 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  

• Advantages:
  • Lower down payment
  • Easier to qualify
  • Lower rates may be available  
• Disadvantages
  • 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  

• Advantages:
  • Don't need to verify income
  • Faster approval
  • Good for borrowers who may not qualify with a full income documentation program  
• Disadvantages
  • Higher rates
  • Higher down payment  

• Advantages:
  • 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  
• Disadvantages
  • Higher rates
  • Principal loan balance will not decrease during the interest only payment period
  • Payment will be higher for the remaining term  

• Advantages:
  • 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  
• Disadvantages
  • 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  

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

• Advantages:
  • You only borrow what you need
  • Pay interest only on what you borrow
  • Flexible access to funds
  • Interest may be tax deductible
  • May be free of closing costs
  • A good source for an emergency fund, if set up in advance
  • Can be used for debt consolidation and lower payments
  • Rates are usually lower than consumer loan or credit card rates  
• Disadvantages
  • Rates can change. The maximum interest rate can be relatively high
  • Payments can change
  •  Harder to refinance your first mortgage  

• Advantages:
  • Fixed payments
  • Interest may be tax deductible
  • Get cash out for any purpose  
• Disadvantages
  • Higher interest rates compared to first mortgage
  • Harder to refinance your first mortgage
  • Interest is paid on the entire loan amount, compared to an equity line of credit