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Loan Programs -- which one is right for me?
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Every client's needs are different, and no single program is best for all clients. That said, here are some general rules of thumb about the different types of mortgages available today. Call us to discuss these in more detail, and to custom-fit a program to your exact needs.
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Years you plan to
stay in the house
1-3
3-5
5-7
7-10
10+
10+
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Recommended Program
3/1 ARM, 1-year ARM, 6-month ARM
5/1 ARM
7/1 ARM
10/1 ARM, 30-year Fixed, 15-year Fixed
30-year Fixed, 15-year Fixed,
Home Ownership Accelerator (It's Back!)
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Loan Programs
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Fixed Rate Mortgages |
Advantages |
Disadvantages |
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30-year Fixed
15-year Fixed
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- 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
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- Higher interest rate
- Higher mortgage payments
- Rate does not drop if interest rates
- improve
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Adjustable Rate Mortgages |
Advantages |
Disadvantages |
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10/1 ARM
7/1 ARM
5/1 ARM
3/1 ARM
1-mo., 6-mo, 1-yr ARM's
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- Lower initial monthly payment
- Lower payment over a shorter time period
- Payment may go down if rates improve
- May qualify for higher loan amounts
- Historically less expensive than fixed rate loans as borrower takes on rate-related risk (versus the lender bearing that risk)
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- More risk
- Payments may change over time
- Potential for high payments if rates go up dramatically
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Advantages |
Disadvantages |
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Nation's first true all-in-one loan,
combining first-lien line of credit
with integrated checking account.
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- Paycheck reduces loan balance directly
- Can save thousands in interest
- Can pay off years sooner
- No change to spending habits
- Full access to cash for expenses, emergencies, investments
- 30-year access to equity
- Ultimate flexibility
- Learn more
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- Requires excellent credit
- Requires 25% equity in home
- Requires positive cash flow
- Only for longer-term borrowers
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Home Equity Lines of Credit |
Advantages |
Disadvantages |
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HELOC's
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- Borrow only what you need
- Pay interest only on what you borrow
- Access to funds
- Interest may (or may not) be tax deductible
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- Tougher to get, recently
- Must have significant equity in home
- Prime-based variable rate
- Payments can change
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Home Equity Fixed Loan |
Advantages |
Disadvantages |
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- Fixed payments
- Interest may be tax deductible
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- Tougher to get, recently
- Must have significant equity in home
- Prime-based variable rate
- Payments can change
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First Time Buyer Programs |
Advantages |
Disadvantages |
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- Lower Down Payment
- Easier to Qualify
- Potentially lower rate
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- Income/property limitations
- Prime-based variable rate
- Payments can change
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No Point, No Fee Programs |
Advantages |
Disadvantages |
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- No out-of-pocket closing costs
(paid by lender)
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- Higher rates
- Higher payments
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Imperfect Credit programs |
Advantages |
Disadvantages |
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- May help you improve your credit if you make payments on time
- When used for debt consolidation, you may be able to reduce your overall monthly debt payments
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- Higher interest rate
- Less-favorable terms
- Hard to get long-term fixed rate loans
- May have prepayment penalties
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