| Loan Program | Advantages | Disadvantages |
| Fixed-rate mortgages |
- Predictable monthly payments
- Less risk if market conditions cause rates to rise
- Rate does not change
|
- You pay more in interest
- Higher interest rate
- Unable to take advantage of lower interest costs if market changes to lower rates
|
| Adjustable rate mortgages |
- Flexibility
- Lower initial monthly payment
- You pay less for short term ownership
- May be easier to qualify for higher loan amounts
|
- More risk
- Inability to predict future housing costs
- Potential higher payments (at max. interest rate)
|
| Stated income mortgages |
- Don't need to verify income
|
- Higher rates
- Need a low LTV to qualify
|
Combination loans
(such as an 80/10/10) |
- Avoid PMI
- Potential tax advantages
|
- Possibly higher monthly payments
- Two monthly payments instead of one
|
| Home equity line of credit |
- Flexible access to funds
- Potential tax advantages
- You only draw what you need
- You only pay interest on what you borrow
|
- Ties up equity making it unavailable for other needs
- Higher interest rate than a first mortgage
|
| Home equity loan |
- Predictable fixed payments
- Possible tax advantages
|
- Ties up equity making it unavailable for other needs
- Higher interest rate than a first mortgage
- Cannot pay down and withdraw additional funds
|
