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Mortgage
Options
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Appropriate
for borrowers who: |
FIXED RATE
MORTGAGE
(30,10,15,10 years) |
- Interest rate &
monthly payment
remain the same for the entire term of the loan
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- plan to live in
property more than 10 years
- like total payment
stability
|
10/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
- 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
|
- 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
|
7/23 (2-Step)
or
'30 due in 7'
MORTGAGE |
- 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
|
- 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
|
7/1 YEAR
ADJUSTABLE RATE
MORTGAGE |
- 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
|
- 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
|
7 YEAR
BALLOON
MORTGAGE |
- 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
|
- 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
|
5/25 (2-Step)
or
'30 due in 5'
MORTGAGE |
- 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
|
- 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
|
5/5 & 5/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
- 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)
|
- 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
|
5 YEAR
BALLOON
MORTGAGE |
- 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
|
- 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
|
3/3 & 3/1 YEAR
ADJUSTABLE RATE
MORTGAGES |
- 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)
|
- 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
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1 YEAR
ADJUSTABLE RATE
MORTGAGES |
- Interest rate adjusted
every year, so monthly payment is subject to change every year for entire 30 year loan
term
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- want to take advantage
of lowest rate possible
- are willing to accept
yearly payment changes
OR
- cannot qualify at
higher rate programs
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