Fixed Rate Mortgages
30 year
15 year

• Protected against rate hikes because interest rates don’t change.
• Monthly payments are fixed.
• Have the option to refinance if/when rates go down. 

• Interest rate is usually higher.
• Higher mortgage payment.
• Rates will not drop even if interest rates do.

Adjustable Rate Mortgages
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month ARM
1 month ARM

• Qualify for higher loan amounts.
• Lower monthly payment initially.
• Lower payment over a shorter period of time.
• Rates and payments could go down if interest rate improves.

• Payments fluctuate over time.
• Payments could increase if interest rates go up. 

Balloon Mortgages
7 year
5 year

• Option to convert to a new loan after an initial term.
• Lower monthly payment initially.
• Lower payment over a shorter period of time.

• Risk of foreclosure if unable to make balloon payment and cannot refinance or choose the conversion option.
• Risk of higher interest rates at the end of the initial fixed period.  

First Time Buyer Programs

• Easier to qualify.
• Lower down payment.
• May get a lower rate.

• Can be subject to income and property value limitations.
• Some programs with built-in government subsidies may have a recapture tax if you sell too early.

Stated Income Programs

• Fast approval.
• Don’t need to verify income.

• Higher rates.
• Higher down payment.

No Point/No Fee Programs

• Less money required to close.

• Higher rates.
• Higher payments.

Imperfect Credit Programs

• Ability to reestablish credit if mortgage is paid on-time.
• Can be used for debt consolidation, which could reduce monthly payment.

• Higher rates.
• Loans may have pre-payment penalties.
• More difficult to get long term fixed loans.

Home Equity Line of Credit

• Borrow what you need.
• Only pay interest on what you borrow.
• Access to funds.
• Interest may be tax-deductible.

• Interest rates vary and the maximum rate is normally high.
• Payments will fluctuate.
• Harder to refinance your first mortgage.