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Loan Programs
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Advantages
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Limitations |
30 year Fixed
15 year Fixed |
- Monthly payments won't change
- Interest rate Fixed
- 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 (ARMS) |
- 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
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- More risk
- Payments may change over time
- Potential for high payments if rates go up
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Reverse Mortgages
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- Turn equity into cash, monthly income, a line of credit, or a combination of all three
- No mortgage payment required during life of loan
- No income / employment qualification required
- Money can be used for any purpose, i.e. home improvement, tuition, medical expenses and prescription drugs
- Cash proceeds are tax free
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- Borrower must be 62 or older
- Uses up equity in the home
- Borrower still responsible for taxes, insurance and maintenance
- Interest is not tax deductible until the loan is paid off
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First Time Buyer Programs |
- Lower down payment
- Easier to qualify
- Sometimes you may get lower rate
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- 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.
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FHA / VA
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- No down payment required on VA loans
- Only 3% required on FHA loans
- No minimum credit score to qualify
- Cash out Refi up to 95% on FHA
- Higher debt ratios allowed for qualification
- Better rates than conventional loans
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- Must be a veteran or active military for VA loans
- Loan amounts are usually less than conventional loans
- Mortgage Insurance required on FHA
- Funding Fee required on VA
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Equal Housing Opportunity Community First Bank Loan Services ™ 2008