| 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 |
|
