| PROGRAM |
Appropriate for borrowers who: |
Loan Characteristics |
30 YEAR
FIXED RATE
MORTGAGE |
plan to live in property more than 10 years and like total payment stability |
Interest rate &
monthly payment
remain the same for 30 years |
10/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
plan to live in property more than 10 years like initial payment stability and can accept later changes
OR
plan to move within 10 years and want loan to remain in force in case plans change |
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 |
7/23 (2-Step)
or '30 due in 7'
MORTGAGE |
plan to live in property more than 10 years and can tolerate one payment adjustment
OR
plan to move within 7 years and want to remain in force in case plans change |
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 |
7/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
plan to live in property more than 7 years and like initial payment stability, can accept later changes
OR
plan to move within 7 years and want loan to remain in force in case plans change |
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 |
7 YEAR
BALLOON
MORTGAGE |
plan to live in property more than 7 years and are willing to refinance at prevailing market rates
OR
plan to move within 7 years and like payment stability |
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 |
5/25 (2-Step)
or '30 due in 5'
MORTGAGE |
plan to live in property more than 5 years and can tolerate one payment adjustment
OR
plan to move within 5 years and want loan to remain in force in case of plans change |
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 |
5/5 & 5/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
plan to live in property more than 5 years and like initial payment stability, can accept later changes
OR
plan to move within 5 years and want loan to remain in force in case plans change |
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) |
5 YEAR
BALLOON
MORTGAGE |
plan to live in property more than 5 years andare willing to refinance at prevailing market rates
OR
plan to move within 5 years and like payment stability |
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 |
3/3 & 3/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
plan to live in property more than 3 years and like initial payment stability, can accept later changes
OR
plan to move within 3 years and want loan to remain in force in case plans change |
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) |
1 YEAR
ADJUSTABLE RATE
MORTGAGES |
want to take advantage of lowest rate possible and are willing to accept yearly payment changes
OR
cannot qualify at higher rate programs |
Interest rate adjusted every year, so monthly payment is subject to change every year for entire 30 year loan term |
| Many other loans available: Interest Only; 40 yr Term; Cash-Out Loans |
