30 year fixed

15 year fixed

• 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

• Higher interest rate

• Higher mortgage payments

• Rate does not drop if interest rates improve

10/1 ARM

7/1 ARM

3/1 ARM

1 year ARM

6 month ARM

1 month ARM

• 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

• More risk

• Payments may change over time

• Potential for high payments if rates go up

7 year

5 year

• 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.

• Risk of rates being higher at the end of the initial fixed period

• Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option

• Lower down payment

• Easier to qualify

• Sometimes you may get lower rates

• 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.

• Don’t need to verify income

• Faster approval

• Higher rates

• Higher down payment

• No closing costs

• Less money required to close

• Higher rates

• Higher payments

• 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

• Higher rates

• Terms may not be as favorable

• Harder to get long term fixed loans

• Loans may have prepayment penalties

• You only borrow what you need

• Pay interest only on what you borrow

• Flexible access to funds

• Interest may be tax deductible

• Rates can change. The maximum interest rate is normally high.

• Payments can change

• Harder to refinance your first mortgage

• Fixed payments

• Interest may be tax deductible

• Higher interest rates than on 1^st mortgages

• Harder to refinance your first mortgage