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YOUR IDEAL HOME LOAN PROGRAM |
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| Contrary
to what you have read and heard, essentially,
there are two (2) different types of
loan programs: |
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1. Fixed Rate
Mortgages, and
2. Adjustable Rate Mortgages
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| Yes,
I know…you have read and been
told that there are hundreds upon hundreds
of loan programs to choose from, which
is true -- to a certain extent. Basically,
what lenders have done is took the fixed
rate and adjustable rate mortgages and
tweaked them -- or created -- an array
of different versions of each. Ultimately,
though, you are going to start off by
choosing either a fixed rate or adjustable
rate mortgage. Once you have made that
decision, you will still have a variety
of programs to choose from based on
your specific needs and plans.
The tables below
are designed to help you decide what
loan program is best suited for your
individual needs. Please call Nicolas
Romo if you have any questions or
if you need assistance.
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| Years
You Plan To Live in Your House |
Ideal
Loan Program |
1-3 |
3/1 A.R.M, 1 yr A.R.M, 6 Month A.R.M |
3-5 |
5/1 A.R.M |
5-7 |
7/1 A.R.M |
7-10 |
10/1 A.R.M, 20 Yr Fixed, 15 Yr Fixed |
10+ |
30 Yr Fixed, 20 yr Fixed, 15 Yr Fixed |
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30
Yr Fixed
20 Yr Fixed
15 Yr Fixed |
Payments are fixed over the entire
life of the loan |
Higher % Rate |
| Interest Rate does not
change |
Higher monthly payment |
| Secured if rates rise |
% Rate does
not go down when % rates fall |
| May refinance if rates
fall |
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ADJUSTABLE
RATE MORTGAGES |
Program |
Benefits |
Disadvantages |
10/1
ARM
7/1 ARM
5/1 ARM
3/1 ARM
1 Yr ARM
6 Month ARM
1 Month ARM |
Rates & payment may decrease if
rates get better |
Higher Risk |
| Lower Initial payment |
Payment can change over
time |
| 30 yr term – No
Balloon payment |
If rates
increase, potential for higher payment |
| Possibly qualify for
higher loan amounts |
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ADJUSTABLE
RATE MORTGAGES |
Program |
Benefits |
Disadvantages |
5
Year
7 Year
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Lower Initial payment |
Risk of rates being higher at the
end of the initial fixed period |
| Lower payment for a
pre-determined period of time |
Risk of foreclosure
if you cannot make balloon payment,
refinance, or exercise the conversion
option |
| Many balloon mortgages
offer the option to convert to a new
loan after the initial term |
Balloon payment requires
you to sell or refinance after the term,
as opposed to a 5/1 or 7/1 program w/
a 30 year term |
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FIRST
TIME HOME BUYER PROGRAMS (ARM or FIXED) |
Benefits |
Disadvantages |
| Qualifying is easier |
Educational courses may be required
to qualify |
| Lower or zero down payment |
Some government subsidized programs
may generate a recapture tax if you
sell your home too soon |
| Lower rates me be available |
You may be subject to income &
property value restrictions |
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