|
Back to Financing Resources
Credit Advantage Loans
Adjustable Rate Mortgage (ARM)
Balloon Mortgages
No or Stated Income / Asset Programs
No Point, No Fee Programs
Home Equity Line of Credit
Home Equity Fixed Loans
Adjustable Rate Mortgage :
(ARM)
10/1 ARM; 7/1 ARM; 3/1 ARM; 1 year ARM; 6 month ARM; 2/28: 2 yr. fixed rate/28 yr. 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
- Payments may change over time
- Potential for high payments if rates go up
Balloon
Mortgages
15 year (30 yr. fixed, due in 15); 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 of foreclosure if you cannot make the balloon payment, refinance or exercise the conversion option
No or Stated Income / Asset Programs
Advantages
- No tax returns or W-2s
- No proof of assets or down payment
- No verification of income
- Fast approval
Disadvantages
- Higher rates
- Higher down payment
No Point, No Fee Programs
Advantages
- No closing costs
- Less money required to close
Disadvantages
- Higher rates
- Higher payment
Home Equity Line of Credit
Advantages
- You only borrow what you need
- Pay interest only on what you borrow
- Access to funds as needed
- Interest may be tax deductible
- Up to 125% loan-to-value
Disadvantages
- Rates can change. The maximum interest rate is normally high
- Payments can change
- Harder to refinance your first mortgage
Home Equity Fixed Loans
Advantages
- Fixed payments
- Receive one lump sum at closing
- Interest may be tax deductible
Disadvantages
- Higher interest rates compared to 1st mortgages
- Harder to refinance your first mortgage
Back to Financing Resources
|