Advantages	Disadvantages
Monthly payments are fixed over the life of the loan Interest rate does not change Protected if rates go up Can refinance if rates go down	Higher interest rate Higher mortgage payments Rate does not drop if interest rates improve

The 15-Year Fixed-Rate Mortgage shortens the life of the loan to 15 years. That means you own your home in half the time. And because the loan is shorter, you’ll pay substantially less in the total interest—less than half the total interest of a 30-year mortgage. On the other hand, because you repay the loan in half the time, the monthly payments are higher than those of a 30-year mortgage. For people who can afford the higher monthly payments, this is an excellent choice, with lower total costs and a shorter term. It can allow you to own your home before your children start college or before you reach retirement.

Advantages	Disadvantages
Shorter term, own your home in half the time (allows you to own your home before your children start college or before you reach retirement) Often the total interest paid over the life of the loan is lower, less than half the total interest of a 30 yr	Bigger monthly payment Qualification may be difficult because the income requirement is higher

For people willing to make a half payment from each paycheck, this loan offers rapid building of equity. The biweekly mortgage is usually a 30–year fixed rate mortgage.

What’s different is that payment for half the monthly amount is made every two weeks. In this way, you make the equivalent of 13 months worth of payments every year.

Also, because your payments are applied to the loan every 14 days, the principal amount decreases faster, saving even more in interest costs. As a result, your loan term shortens to 22 or 23 years, providing a substantial decrease in total interest costs.

Advantages	Disadvantages
Loan is paid off much more quickly Interest savings is significant Often automatically deducted from your checking account	Must be able to budget and make the half-mortgage payment every two weeks

Advantages	Disadvantages
When interest rates go down, payment goes down Initial interest rate can be as much as 2 to 3 percent lower than a comparable fixed rate mortgage Qualifying is easier Lower initial interest rate compared to fixed-rate mortgages, which can make homeownership more affordable and make qualifying for a mortgage easier. And if interest rates decline, your mortgage payments decline as well.	When interest rates go up, payments go up The potential for higher monthly payments if interest rates increase Requires more budgeting discipline

The terms hybrid and convertible tend to be used interchangeably. However, there are two different types of hybrid loans:

Start as a fixed rate and convert to an ARM

This loan is fixed for a period of time, such as 2, 3, 5, 7, or 10 years, then becomes a one-year ARM (changing its rate annually) after the fixed period. You may see them advertised as, for example, a 5/1 convertible ARM.

Start as an ARM, convert to fixed rate

A convertible ARM contains a provision that will allow a borrower to convert an ARM to a fixed rate after an initial payment period. There is usually a fee to be paid when a loan converts, and the rate is slightly higher than the going rate for fixed rate loans.

Advantages	Disadvantages
Advantages of an ARM with the ability to convert to a fixed-rate mortgage	If you don’t convert, it’s a regular ARM If interest rates are at a higher level, when its time to convert, you may not want to go with it

The Option ARM provides you with maximum cash flow flexibility - up to four (4) payment options on each monthly statement.  The Option ARM is an adjustable rate mortgage offering a low introductory rate resulting in an initial minimum payment lower than most other types of mortgage financing.  The low Minimum payment may sgnificantly free up cash flow that can be used to fund investments, meet educational tuition requirements or make home improvements.

Advantages	Disadvantages
Your choice of monthly payment options (Minimum Payment; All Interest Payment; 30-Year Full Payment; 15-Year Full Payment)	Requires more budgeting discipline May result in negative amortization if Minimum Payment is over-used.

This type of loan is primarily for those who work on commission and receive big bonuses once or twice a year. "Interest only" loans mean lower monthly payments for a fixed period of time because you pay only the interest on your mortgage. Most people then choose to make big payments on the principal when bonus checks and commissions are received

Advantages

Disadvantages

Allows you to get a bigger loan and more house For home buyers who receive the bulk of their income in bonuses Good for people who expect to increase their income quickly Also good for people who plan to move before principal comes due and for those who reasonably expect their incomes to rise strongly over time

Must budget wisely and make lump sum payments, steering clear of using that money for other purposes  except to strong investments At end of the fixed period, you must refinance, pay a lump sum, or start paying on the principal If house doesn’t appreciate, you may owe money when selling When paying only the interest, the principal does not decrease and you do not build equity unless the home appreciates in value

Designed for those who have trouble verifying all of their income such as self-employed borrowers, commissioned professionals, or service industry professionals (e.g.; bartenders, waitresses, hair stylists)

Advantages	Disadvantages
No need to verify income Faster approval	Higher interest rate because of higher risk Bigger down payment required  Higher credit standards

A Balloon Mortgage is a special kind of fixed-rate mortgage that offers relatively low, fixed payments as though it were a standard 30-year fixed-rate mortgage. But after a few years—usually five to seven years—the mortgage term ends with a single large payment (the “balloon”) for all the remaining principal. Borrowers generally have the option to refinance their balloon mortgage to a fixed-rate loan at the end of the term. Because the term is actually quite short, the total interest paid is significantly less than a conventional mortgage, making this a good choice if you don’t plan to stay in the home you’re buying for very long (if you sell before the loan comes due, the “balloon” payment will not be a problem).

Advantages	Disadvantages
A good choice for those who don't expect to own their home past the maturity date when the balloon payment is due Short-term loan with equal payments Payments are usually lower than conventional fixed loans Good choice if home is expected to appreciate Lower interest rate then long term loan	At the end of a few years, you must sell your house or refinance because all remaining principal is due If you need to refinance, interest rates may be much higher than when you got the balloon loan May end up owing remaining principal plus additional settlement costs if the house doesn't appreciate

Advantages	Disadvantages
You only borrow what you need Payment interest only means lower payments Flexible access to funds Interest is tax-deductible No out-of-pocket expense	Rates can change: the maximum interest rate is normally high Payments can change Harder to refinance your first Harder to obtain with damaged credit

We're eager to work with you in securing your dream home.  Please contact us for additional details and rate information on these loan types.