Fixed Rate Mortgages

Monthly payments are the same over the life of the loan

Interest rate is the same over the life of the loan

Interest rate does not change if rates increase

Typically interest rates and payments are higher

Interest rate does not change if rates decrease

Prefer fixed payments

Do not want to risk fluctuating interest rates

Adjustable Rate Mortgages

Initial monthly payments are lower

Rates and payments may be lowered if interest rates decrease

May qualify for higher loan amounts

Rates and payments may increase if interest rates increase

Prefer lower payments for initial period

May need to qualify for higher loan amounts

First Time Buyer Programs

Lower down payment required

Easier to qualify

Many times interest rates are lower

May be subject to income and property value limitations

Some government subsidy programs may have a recapture tax if you sell before a specified time period

First time buyers who do not have funds for a large down payment

Stated Income Programs

Don’t need to verify income

Faster approval

Typically higher interest rates

Typically a higher down payment is required

Hard to get in current economic climate

Are currently unemployed

Need a fast approval

Poor credit programs

Opportunity to re-establish credit if monthly payments are made on time

Can use for debt consolidation and potentially reduce monthly debt payments

Typically higher interest rates

Loan terms may be stricter

Loans may have prepayment penalties

Hard to get in current economic climate

Do not have good credit

Home Equity Line of Credit

Only borrow what you need

Pay interest only on what you borrow

Interest rates are typically lower than bank loans

Flexible access to funds

Interest may be tax deductible

Adjustable interest rates, with maximum rate typically high

Monthly payments may fluctuate with interest rates

Harder to refinance your first mortgage

Need an open line of credit such as for remodeling projects

Home Equity Fixed Loan

Monthly payments are fixed

Interest rates are typically lower than bank loans

Interest may be tax deductible

Interest rates are typically higher than on first mortgages

Harder to refinance your first mortgage

Need a fixed loan amount such as for debt consolidation