Loan Programs

Years you plan to stay in the house Recommended Program
1-3 3/1 ARM, 1 year ARM of 6 month ARM
3-5 5/1 ARM
5-7 7/1 ARM
7-10 10/1 ARM, 30 year fixed or 15 year fixed
10+ 30 year fixed or 15 year fixed

Loan program advantages and disadvantages

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 changes
  • 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
5/1 ARM
3/1 ARM
  • Lower initial monthly payment
  • Lower payment over the fixed 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