PROGRAM |
APPROPRIATE FOR BORROWS WHO: |
LOAN CHARACTERISTICS |
30 YEAR
FIXED
RATE
MORTGAGE |
 plan
to live in property more than 10 years
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, can accept later changes
OR
plan
to move within 10 years
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
can
tolerate one payment adjustment
OR
plan
to move within 7 years
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
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
|
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
are
willing to refinance at prevailing market rates
OR
plan
to move within 7 years
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
can
tolerate one payment adjustment
OR
plan
to move within 5 years
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
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 |
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
are
willing to refinance at prevailing market rates
OR
plan
to move within 5 years
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
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 |
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
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 |
