Years you plan to stay in the house

recommended LOAN PROGRAM

LOAN PROGRAMS

ADVANTAGES

DISADVANTAGES

Fixed rate products
30 Year Fixed (30 year)
20 Year Fixed (20 year)
25 Year Fixed (25 year)
15 Year Fixed (15 year)
10 Year Fixed (10 Year)

• 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

Hybrid and adjustable rate products
10 Year Fixed (30 year)
7 Year Fixed (30 year)
5 Year Fixed (30 year)
3 Year Fixed (30 year)
1 Year Fixed (30 year)
6 Month Fixed (30 year)
Monthly Adjustable COFI

(30 year)
Monthly Adjustable LIBOR

(30 Year)

• 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

40 Year Term
With a 40-year term, loan payments are calculated on a 40-year term versus the more traditional 15 or 30. This reduces the monthly payment quite a bit.

• Lower Monthly Payments
• Greater cash flow for investment properties.

• Slower to build equity unless extra principal payments are made

• Lower Monthly Payments
• Greater cash flow for investment properties.

• Slower to build equity unless extra principal payments are made

• No Mortgage Insurance

• Tax advantages

• Ability to waive tax and insurance impounds

• Higher interest rate on the second lien, however this is usually counterbalanced by the waiver of mortgage insurance.

First Time Buyer Programs 100% Loan

Conventional Loans

• 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

FHA Loans

97% Loan

• Easier to qualify

• Approval not based upon credit (FICO) scores.

• Up from MIP premium

• Higher rates

• Stricter standards set for property condition

VA Loans

100% Loans

Must be a US Armed Services Veteran  to be eligible

• Easier to qualify

• Approval not based upon credit (FICO) scores.

• No monthly mortgage insurance

• Up from MIP premium

• Higher rates

• Stricter standards set for property condition

Stated Income Programs
30 Year Fixed (30 Year)
Up to 95% LTV

• No documentation or verification of income required

• Faster approval

• Higher rates

“No Ratio” Programs
Up to 95% LTV

• Income and employment are documented and verified, but not considered in qualifying

• Higher rates

• No documentation or verification of income or assets required

• Faster approval  

• Flexibility

• Higher rates

• Higher down payment

• Payment flexibility and reduced minimum monthly requirements.

• Ability to use payment saving towards paying off higher yield loans or for investment purposes.

• Only for Jumbo Loans ($252,700.00 or above)

• No Principal Reduction

• Pre Payment Penalty

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

Negative Amortization Loans

Up to 95% LTV

1 Year fixed (30 Year)
Monthly ARM (30 Year)
COFI or LIBOR Monthly ARM's

• Ability to pay full payment, interest only, or negative amortization.

• Payment flexibility and reduced minimum monthly requirements.

• Ability to use payment saving towards paying off higher yield loans or for investment purposes.

• Slow moving COFI Index

• Ability to state income

• Possible negative equity

• Pre Payment Penalty

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

Bi-Weekly Loans

Available on most loan products

• Reduces principal every 14 Days instead of once per month

• Pay off a home up to ten years faster

• Equivalent of making 13 yearly payments instead of 12

No point, No fee Programs

Available on most loan products

• No closing costs

• Less money required to close

• Higher rates

• Higher payments

Imperfect Credit Programs

• 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

Home Equity Fixed Loan  

Up to 80% LTV

• Fixed payments

• Interest may be tax deductible

• Higher interest rates than on 1st mortgages

• Harder to refinance your first mortgage

Second Home Loans
Up to 95% LTV

• Ability to purchase a second or vacation home

• Slightly higher rates

Low to Moderate Income Programs
MyCommunity Fannie Mae

• Provides significant flexibility in credit guidelines for borrowers with limited cash resources.

• No down payment required.

• Grade A interest rates

• Insurance and Tax escrows cannot be waived

• MI required

Construction Loans
(one time close)

• One closing

• The lender initiates and regulates the draws

• Ability to lock loan before construction is complete

• Reduced flexibility

• Contact prices determines LTV

Construction Loans
(two time close)

• Greater flexibility

• Second loan is considered a refinance so the LTV is based upon the appraised value

• Slightly higher fees

• Enables Elderly to convert home equity into cash for living expenses, home improvements, home health care, etc.
• Can be in the form of a lump sum, fixed monthly payments, or a line of credit.
• Applicants do not have the same income or credit qualifications.
• Generally, the borrower can not be forced to sell their home to repay the mortgage as long as they occupy the residence.