Years you plan to stay in the house? |
Recommended Program |
1-3 |
3/1 ARM, 1year ARM or 6 month ARM |
3-5 |
5/1 ARM |
5-7 |
7/1 ARM |
7-10 |
10/1 ARM,30 or 15 year fixed |
10+ |
30 or 15 year fixed |
Fixed Rate Broadloans |
Advantages |
Disadvantages |
30 year fixed |
Monthly payments are fixed life of loan |
Higher interest rate
15 year fixed |
15 year fixed |
interest rate does not change |
Higher mortgage payments
- protected if rates go up |
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Rate does not drop if rates improve |
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Can refinance if rates go down
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Adjustable Rate BroadLoans |
Advantages |
Disadvantages |
10/1 ARM |
Lower initial monthly payment |
More Risk |
7/1 ARM |
Lower payment over a shorter period of time |
Higher mortgage payments |
3/1 ARM |
Rates and payments go down if rates improve |
Rate does not drop if rates improve |
1 year ARM |
May qualify for higher loan amounts |
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6 month ARM |
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1 month ARM |
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Balloon Broadloans |
Advantages |
Disadvantages |
7 year |
Lower initial monthly payment |
Risk of rates being higher at the end of the period |
5 year |
Lower payment over a shorter period of time |
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