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"Which Loan is Right For Me?"

Do you have a Real Estate question? Wondering about financing a property, personal finance, improving your credit , managing your debts, buying, selling, or real estate investment? Send your inquiry to The Mortgage Guru.

Article: "Which Loan is Right For Me?"
By Andre Plessis

The best loan can either be the loan with the lowest total costs, least long-term monthly payment, the least initial monthly payment or the quickest equity build-up depending on your situation.

Years you plan to stay in the house?	Recommended loan programs:
1-3 years	3/1 ARM, 103-107%, Interest Only
3-5 years	5/1 ARM, 103-107%, Interest Only
5-7 years	7/1 ARM, 103-107%, Interest Only
7-10 years	10/1 ARM, 15 year fixed or 30 year fixed
10+ years	15 year fixed or 30 year fixed

Loan Programs

Advantages

Disadvantages

Fixed Rate Mortgages

	30 year fixed
	15 year fixed

	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

Adjustable Rate Mortgages

	10/1 ARM
	7/1 ARM
	3/1 ARM
	1/1 ARM

	Option to convert to a new loan after the initial term
	Lower initial monthly payment
	Rates and payments may go down if rates improve at end on ARM term
	May qualify for higher loan amounts

	Payments may change after initial term
	Potential for high payments if rates go up most do have caps to amount of increase and you can always refinance
	Cost to refinance if rates have gone up

NEW Program

103% 107%

	Requires NO 'out of pocket' cash
	Allows you include closing costs & fee's in mortgage note

	Slightly higher interest rate
	May cost you more over longer period of time because your paying interest financing those costs

Interest Only

Payments are considerably less and intended for those in areas with high appreciation

If rates go up cost to refinance must be used for total loan cost

First Time Buyer

	Lower down payment
	Easier to qualify
	Sometimes you may get lower rates

	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

Stated Income

	Don’t need to verify income
	Faster approval

	Higher rates
	Higher down payment

No point, No fee

	No closing costs
	Less money required to close

	Slightly Higher rates
	Higher payments

Imperfect Credit

	Potential for reestablishing credit if you pay your mortgage on time
	When used for debt consolidation, you may be able to reduce your monthly debt payment

	Higher rates
	Terms may not be as favorable
	Harder to get long term fixed loans
	Loans may have prepayment penalties

Home Equity
Line of Credit

	You only borrow what you need
	Pay interest only on what you borrow
	Flexible access to funds
	Interest may be tax deductible

	Rates can change. The maximum interest rate is normally high
	Payments can change
	Harder to refinance your first mortgage

Home Equity
Fixed Loan

	Fixed payments
	Interest may be tax deductible

	Higher interest rates than on 1^st mortgages
	Harder to refinance your first mortgage

Andre Plessis

Andre Plessis
"The Mortgage Guru"
"A Mortgage Professional whose primary goal is to provide the expertise, guidance and skills necessary to obtain the best mortgage to meet your personal needs".
View Client Testimonials

P.S. If you are at all intimidated or unsure about the mortgage process if you don’t understand how to evaluate your options in getting a mortgage loan our 15 key questions will help you feel comfortable that you are making the best decisions. Also if you are in the process of refinancing your home with anyone, CALL ME and I will let you know if you are being offered the best loan option based on market conditions and your financial situation.

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