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425.821.9028

Your Personal Mortgage Consultant - MLO # 5202

                                                                                                                                                                                NMLS #   107614
 

Fred W. Holland

Which Loan Term Is Right For You?

 
In the past every home owner got the same loan: a 30 year fixed mortgage. Today there are many different loan programs and choosing the right one could save you hundreds of dollars on your monthly payments.
 
How Long Do You Plan
On Living In The House?
We Recommend
Not Very Long (1-3 Years) 3 year fixed ARM or 1 year fixedARM
A few years (3-5 Years) 5 year fixed ARM
At least 5 years (5-7 years) 7 year fixed ARM
Around 10 years ( 7-10 years) 10 year fixed ARM, 30 yr or 15 yr fixed
A long time (10 plus years) 30 year fixed or 15 year fixed


Loan Programs
Advantages
Disadvantages
30 year Fixed
15 year Fixed
  • Monthly payments won't change
  • Interest rate Fixed
  • 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
   
Adjustable Rate Mortgages (ARMS)
  • Lower initial monthly payment
  • Lower payment over a shorter period of time
  • Rates and payments may go down if rates improve
  • May qualify for higher loan amounts
  • More risk
  • Payments may change over time
  • Potential for high payments if rates go up
   
Balloon Mortgages
  • Lower initial monthly payment
  • Lower payment over a shorter period of time
  • Many balloon mortgages offer the option to convert to a new loan after the initial term.
  • Risk of rates being higher at the end of the initial fixed period
  • Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option
   
First Time Buyer Programs
  • Lower down payment
  • Easier to qualify
  • Sometimes you may get lower rate
  • May be subject to income and property value limitations
  • Some programs which have government subsidies may have a recapture tax if you sell the house too early.
   
No point, No fee Programs
  • No closing costs
  • Less money required to close
  • Higher rates
  • Higher payments
   
   
 
   
 
 
 

 
 
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