|
|
Appropriate for borrowers who: |
PROGRAM |
Loan Characteristics |
|
-
plan to live in property more than 10 years
-
like total payment stability
|
30 YEAR
FIXED RATE
MORTGAGE |
-
Interest rate &
monthly payment
remain the same for 30 years
|
|
-
plan to live in property more than 10 years
-
like initial payment stability, can accept
later changes
OR
-
plan to move within 10 years
-
want loan to remain in force in case plans
change
|
10/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
-
Interest rate &
monthly payment remain
the same for 10 years
-
Starting the 11th year, interest rate
adjusted every year, so payment is subject
to change every year for remainder of loan
|
|
-
plan to live in property more than 10 years
-
can tolerate one payment adjustment
OR
-
plan to move within 7 years
-
want to remain in force in case plans change
|
7/23 (2-Step)
or '30 due in 7'
MORTGAGE |
-
Interest rate & monthly payment remain the
same for 7 years
-
Conversion option: On the 8th year, interest
rate adjusted to reflect prevailing interest
rates, resulting payment will remain the
same for remainder of loan
|
|
-
plan to live in property more than 7 years
-
like initial payment stability, can accept
later changes
OR
-
plan to move within 7 years
-
want loan to remain in force in case plans
change
|
7/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
-
Interest rate & monthly payment remain the
same for 7 years
-
Starting the 8th year, interest rate
adjusted every year, so payment is subject
to change every year for remainder of the
loan
|
|
-
plan to live in property more than 7 years
-
are willing to refinance at prevailing
market rates
OR
-
plan to move within 7 years
-
like payment stability
|
7 YEAR
BALLOON
MORTGAGE |
-
Interest rate & monthly payment remain the
same for 7 years
-
At the end of 7 years, loan is due in full.
Borrower must refinance into new loan at
prevailing interest rates
|
|
-
plan to live in property more than 5 years
-
can tolerate one payment adjustment
OR
-
plan to move within 5 years
-
want loan to remain in force in case of
plans change
|
5/25 (2-Step)
or '30 due in 5'
MORTGAGE |
-
Interest rate & monthly payment remain the
same for 5 years
-
Conversion option: On the 6th year, interest
rate adjusted to reflect prevailing interest
rates, resulting payment will remain the
same for remainder of loan
|
|
-
plan to live in property more than 5 years
-
like initial payment stability, can accept
later changes
OR
-
plan to move within 5 years
-
want loan to remain in force in case plans
change
|
5/5 & 5/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
-
Interest rate & monthly payment remain the
same for 5 years
-
Starting the 6th year, interest rate
adjusted every 5 years (for 5/5 ARM) and
every year (for 5/1 ARM)
|
|
-
plan to live in property more than 5 years
-
are willing to refinance at prevailing
market rates
OR
-
plan to move within 5 years
-
like payment stability
|
5 YEAR
BALLOON
MORTGAGE |
-
Interest rate & monthly payment remain the
same for 5 years
-
At the end of 5 years, loan is due in full.
Borrower must refinance into new loan at
prevailing interest rates
|
|
-
plan to live in property more than 3 years
-
like initial payment stability, can accept
later changes
OR
-
plan to move within 3 years
-
want loan to remain in force in case plans
change
|
3/3 & 3/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
-
Interest rate & monthly payment remain the
same for 3 years
-
Starting 4th year, interest rate adjusted
every 3 years (for 3/3 ARM) and every year
(for 3/1 ARM)
|
|
-
want to take advantage of lowest rate
possible
-
are willing to accept yearly payment changes
OR
-
cannot qualify at higher rate programs
|
1 YEAR
ADJUSTABLE RATE
MORTGAGES |
-
Interest rate adjusted every year, so
monthly payment is subject to change every
year for entire 30 year loan term
|
