| PROGRAM
| LOAN CHARACTERISTICS
|
APPROPRIATE FOR BORROWERS WHO: |
| Fixed Rate Mortgage (30,
20, 15, 10 years) | Interest rate & monthly payment remain the same for the life of the
loan. | Plan to live in property more than 10 years. Like total payment stability.
|
|
10/1 year (ARM) Adjustable Rate Mortgage
|
Interest rate & monthly payment remain the same for 10 yrs. Starting the 11th yr; interest
rate is subject to change every year for the remainder of the loan. | Plan to live in property more than
10 yrs. Like initial payment stability. Can accept changes. OR Plan to move within 10 yrs. 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 yrs. Conversion option: on the 8th yr, interest rate adjusted to reflect prevailing
interest rates; resulting payment will remain the same for the remainder of the loan. | Plan to live in property
more than 10 years. Can tolerate one payment adjustment. OR Plan to move within 7 years. Want loan to remain in force in case plans
change. |
| 7/1 Year ARM |
Interest
rate & monthly payment remain the same for 7 yrs. Starting on the 8th yr; interest rate is adjusted every
year. Payment is subject to change every year for the life of the loan. | Plan to live in property more than
7 yrs. Like initial payment stability, can accept later changes. OR Plan to move within 7 yrs. Want loan to remain in force in
case plans change. |
| 7 year
Balloon Mortgage | Interest
rate & monthly payment remain the same for 7 yrs. At the end of 7 yrs., the loan is due in full. Borrower must refinance
into new loan at prevailing interest rates. | Plan to live in property more than 7 yrs. Are
willing to refinance at the prevailing market rate. OR
Plan to move within 7 yrs. Like stability of payment. |
| 5/25 (2-step) or ’30
due in 7’ Mortgage
|
Interest rate & monthly payment remain the same for 5 yrs. Conversion option: on the 6th
yr., interest rate is adjusted to reflect prevailing interest rate. Resulting payment will remain the same for remainder
of loan. | Plan to live in the property more than 5 yrs. Can tolerate one payment
adjustment. OR Plan to move within 5 yrs.
Want loan to remain in force in case plans change. |
| 5/5 & 5/1 year ARMS | Interest rate & monthly payment
remain the same for 5 yrs. Starting the 6th yr., interest rate adjusted every 5 years for 5/5 ARM and every
year for the 5/1 ARM. | Plan to live in property more than 5 yrs. Like initial
payment stability and can accept later changes. OR
Plan to move within 5 yrs. Want loan to remain in force in case plans change. |
| 5 year Balloon
Mortgage | Interest rate & monthly payment remain the same for 5 yrs. At the end of 5 yrs., loan
is due in full. Borrower must refinance into new loan at prevailing interest rates. | Plan to live in property
more than 5 yrs. Are willing to refinance at prevailing market rates. OR Plan to move within 5 yrs. Like payment stability.
|
|
3/3 & 3/1 year ARMS | Interest
rate & monthly payment remain the same for 3 yrs. Starting the 4th yr., interest rate adjusted every 3 yrs.
For the 3/3 ARM and every year for the 3/1 ARM. | Plan to live in property more that 3 yrs.
Like initial payment stability and can accept later changes. OR Plan to move within 3 yrs. Want loan to remain in force in case plans change. |
| 1 year ARM | Interest rate adjusted every yr.
Monthly payment is subject to change every yr. for the entire 30 yr. loan term. | Want to take advantage of
lowest rates possible. Are willing to accept yearly payment changes. OR Cannot qualify at higher rate programs. |
