Program
|
Loan characteristics
|
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
|
|
| | 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
ballon
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
|
|
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
|
|
| | want to take advantage of lowest rate | | | possible
| | | are willing to accept yearly payment | | | changes
|
OR
| | cannot qualify at higher rate programs
| | | want to take advantage of lowest rate | | | possible
|
|
