Fixed Rate Mortgages:
30 year fixed, 15 year fixed. Monthly payments are fixed over the life
of the loan. The rate does not change. Your protected if rates go up.
You can refinance if rates goes down. The higher the rate the higher your
mortgage payment will be. Rate does not drop if rates go down.
Adjustable Rate Mortgages(ARM)
Lower payment over a shorter periods of time. Rates and
payments go down if rates improve. May qualify for higher loan amount.
More risk. Payment is subject to change over time both up or down.
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month ARM
1 month ARM
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Balloon Mortgages:
7 year, 5 year,15 year (30 yr. fixed, due in 15) plans.
Lower initial monthly payment. Lower payment over a shorter period of
time. Many balloon mortgages offer the options 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 foreclosing if you cannot make balloon payment or
if you cannot refinance or if you cannot exercise conversion option.
Conventional Mortgage:
A mortgage not obtained under a government
insured program (such as VA loans.)
Federal
National Mortgage Association - FNMA (FANNIE MAE)
- A taxpaying corporation created by Congress to support the secondary
mortgage market. It purchases and sells residential mortgages insured
by the Federal Housing Administration (FHA) or guaranteed by the Veterans
Administration (VA) as well as conventional home mortgages.
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Stated
Income
Programs:
Don't need to verify income. Higher rates, Higher downpayment.
Imperfect Credit Programs:
Potential for reestablishing credit if
you pay your mortgage on time. When
used for consolidation, you may be able to reduce your monthly debt payment.
Higher rate may not be as favorable. Harder to get long term fixed loans.
Loans may have prepayment penalties.
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