Loan Programs Years you plan to stay in the house Recommended program 1-3 3/1 ARM, 1 year ARM or 6 month ARM 3-5 5/1 ARM 5-7 7/1 ARM 7-10 10/1 ARM, 30 year fixed or 15 year fixed 10+ 30 year fixed or 15 year fixed

What Are The Basic Loan Types? There are many loan products designed to meet the borrowers individual criteria. Most of these products fall under a few basic loan types. 15-Year and 30-Year Fixed Rate Payment and rate stay the same from start to finish 5 and 7 Year Balloons Lower start rate. Some of the balloon programs may be converted to an adjustable rate or a fixed rate af ter the 5 or 7 years, with very low fee and attractive rate Adjustable Rate Mortgage (ARM) Lowest start rate Adjusts either every 6 months or every 12 months depending on program and grade and is based on the economy 6% ceiling for prime and 7% ceiling for sub-prime. 5/1 and 7/1 Fixed Rate Rate is fixed for the first 5 or 7 years, then shifts to an adjustable rate mortgage (ARM). 2/28 and 3/27 ARM An ARM program that is fixed for the first 2 or 3 years, then shifts into a 6 month adjustable rate mor tgage. It is a sub-prime program giving you a rate lower than the sub-prime 30-year fixed, and if you have had credit problems, it allows a window of time for credit rebuilding and seasoning. You will then want to refinance this loan. What Should I Look For? Do You Need the Lowest Possible Rate to Qualify? To qualify for the house you want, a long term, adjustable rate mortgage, like a 7-year or 10-year ARM may be the answer. Do You Want a Fixed Predictable Loan? If you want a fixed predictable loan for a long time, the 15-year or 30-year fixed is probably the best, especially when you have good credit. Which Program Is Best For Me? Here are a few things to keep in mind when selecting a loan program.   15 Year or 30 Year Fixed Rate Advantages Maximum interest deduction for taxes, sometimes easier to qualify, stable predictable payments, high lo an to value, lower down payment, possible secondary financing if needed.   Disadvantage Pay more interest over the life of the loan, higher starting interest rate, Lower debt ratio (Larger In come to qualify) Higher monthly payment. Adjustable Rate Mortgage (ARM) Advantages Lowest starting interest rates help qualify for higher loan amounts. If you plan to sell within 2-3 years. If you expect your income to increase   Disadvantage Periodic payment and rate increases, builds equity Slower payment increases may affect budget. 5 - 7 YEAR BALLOON MORTGAGE Advantages Lower starting rate than 30 year fixedgreat for refinancing from a higher rate use when you plan a move in 5-7 years Some are convertible to 30-yr fixed or a treasury ARM, low fees, good rates.   Disadvantage Loan Balance Due can Change Long Term Financial Planning If You Plan to Live There Over 7 Years.