Loan Program |
Advantages |
Disadvantages |
Advices |
| 30-Year Conventional Fixed Rate
Loan amount up to $322,700. |
It offers long term rate security. Payments are fixed for thirty years. |
Rate is higher compared to ARM's. |
Recommended to those who do not plan to move or refinance within 8 – 10 years. Paying points to lower the rate is a viable option if the loan is to last more than 4 – 5 years. When rates are historically low, this loan program is a very good choice. Combination 1st's and 2nd's available to avoid PMI. |
| 15-Year Conventional Fixed Rate
Loan amount up to $322,700. |
Rate is secure for fifteen years. You will build equity much faster because more of your payment goes to principal than on a 30 year amortization. Rates are between 0.375% to 0.50% lower than the 30 year fixed rate. |
Payment is generally about 30% higher than a 30 year meaning that you may not qualify for as much of a loan amount as on a 30-Year loan. |
You can save an enormous amount of money in interest over a 30 year loan, and build equity in your property much faster. |
| 30-Year Jumbo Fixed Rate
Loan amounts over $322,700 |
Like it's conventional counterpart, long-term rate stability is this program's advantage. Good for those staying in the property for 8 – 10 years. Paying points is a good buy if staying with loan for 4 – 5 years. |
Priced higher in rate than the 30-Year Conventional fixed rate. |
If you are one that needs rate security for a long period of time, this program is ideal. However, if you move or refinance, more money could have been saved by taking an adjustable rate program. Combination 1st's and 2nd's available to avoid PMI. |
| 15-Year Jumbo Fixed Rate
Loan amount over $322,700 |
Like it's conventional counterpart, rate security is a key feature. Faster equity build-up results from amortizing over 15 years instead of 30 years. |
You will not qualify for as much as on a 30-Year loan because the payment is generally about 30% higher than that on a 30-Year loan. |
To build equity faster and have rate security for a stay in the property from 9 – 15 years, this is a great program. The savings on a 15 Year loan over a 30-Year loan are very great. |
| 7-Year Adjustable Rate Mortgage - 7/1 ARM
30 Year amortization, Rate is fixed 7 years, then adjusts yearly. |
7-year fixed rate period - perhaps more than you will need. |
Rate differential between 7/1 ARM and 30-Year fixed is not as great, bringing into question whether the risk of being there past the fixed rate period is worth the slight rate savings. |
If your length of stay in the property will be 7–8 years and you desire a slightly lower rate, this may be an adequate choice. |
| 5-Year Adjustable Rate Mortgage - 5/1 ARM
30 Year amortization, Rate is fixed 5 years, then adjusts yearly. |
Since the average life of a mortgage loan is between 5 and 7 years, the rate security offered by the 5/1 ARM is adequate for many borrowers. The rate differential between the 30-Year fixed rate and the 5/1 ARM is generally great enough to yield real monetary savings for borrowers. Qualification is at the fixed starting rate, allowing for qualification for greater loan amounts. |
Does 5 years fixed give you enough rate security? |
The 5/1 ARM may be the most versatile qualifying and rate secure program offering you enough time and power to meet your needs. |
| 3-Year Adjustable Rate Mortgage - 3/1 ARM
30 Year amortization, Rate is fixed 3 years, then adjusts yearly. |
You can qualify for a loan amount at the initial rate, giving you the ability to qualify for the highest loan amount. With a 3-year fixed period, there is some rate security combined with a low starting and qualifying rate. |
With only three years of fixed rate security, is that fixed rate security long enough for the period of time you plan to stay in the property? |
If length of stay in the property is 3 to 5 years and you need a lower qualifying rate to get the loan amount you need, the 3/1 ARM offers a great value. When rates are high, this loan program is a very good choice. |
| 7/23 Balloon/Two-Step Loan
30 year amortization, Rate is fixed 7 years. Conversion to new rate for additional 23 year term at lender's option. |
Fixed rate security for 7 years - perhaps more than you will need. |
Rate difference between 7/23 and 30-Year fixed is marginal. Conversion Is dependent on certain conditions existing at lender's option. Conversion rate will be higher than what you can refinance on the open market at the end of year 7. |
The 7/1 ARM may be a better choice because of greater interest rate savings from the 30-Year fixed rate. |
| Credit Info | Real Estate | 
