| PROGRAM |
Appropriate for borrowers 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
|