| PROGRAM |
LOAN RANGE |
Maximum LTV |
|
|
purchase |
refinance |
cash-out |
| 30
Year Fixed |
< $416,999 |
100% |
100% |
100% |
|
| Program
Strengths: |
Long term
rate security |
|
| Program
Drawbacks: |
Often the
highest rate program. May be more rate security than the owner will ever
need. |
|
Recommendations:
|
A good
program if the owner does not plan to move or refinance for more than 10
years. A good choice if rates are historically very low. Points make
sense to purchase if borrower plans to be in the property for at least 4
½ years. |
|
|
purchase |
refinance |
cash-out |
| 30
Year Jumbo: |
> $417,000
|
90% |
90% |
75% |
|
| Program
Strengths: |
Long term
rate Security |
|
| Program
Drawbacks: |
Rates are
higher than even the 30 year fixed conforming. Very expensive mortgage
compared to Jumbo ARM's. |
|
| Recommendations: |
A good
program for the security conscious and those with fears of rising rates,
but not usually a good way to save money. |
|
|
purchase |
refinance |
cash-out |
| 15
Year Fixed |
< $416,999
|
100% |
100% |
100% |
|
| Program
Strengths: |
Rate
security for 15 years. Rates often ½% better than the 30 year. More of
your payment goes to principal and less to interest. Build equity at
twice the pace of a 30 year loan without making double the payment. |
|
|
|
|
|
| Program
Drawbacks: |
Borrower
will qualify for smaller loan amount than for 30 year amortized
programs. |
|
| Recommendations: |
If building
equity is your goal and you would rather save money on interest than buy
a more expensive home, the 15 year is the program for you. |
|
|
purchase |
refinance |
cash-out |
| 15
Year Jumbo |
> $417,000
|
90% |
90% |
75% |
|
| Program
Strengths: |
Rate
security for 15 years. Rates often ½% better than the 30 year. More of
your payment goes to principal and less to interest. Build equity at
twice the pace of a 30 year loan without making double the payment. |
|
|
|
|
|
| Program
Drawbacks: |
Borrower
will qualify for smaller loan amount than for 30 year amortized
programs. |
|
| Recommendations: |
If building
equity is your goal and you would rather save money on interest than buy
a more expensive home, the 15 year is the program for you. |
|
|
purchase |
refinance |
cash-out |
| 1
Year Adjustable |
$100,000
to $1,000,000 |
90% |
90% |
varies |
30 year
Amortization
Rate adjusts every year based on 1 year treasury +( 2.75% or 3.25%).
Caps are 2% per year and 6% for the term of the loan. |
|
| Program
Strengths: |
Lowest rate
for first year out of available programs. |
|
| Program
Drawbacks: |
Risky for
long term considering rate can increase as much as 6% |
|
| Recommendations: |
Great
program for those who are going to be in a home for three years or less,
those who plan on making more money over the next few years and those
looking to refinance within the next three years. Not a good program if
you think rates are going to increase over the next few years. |
|
|
purchase |
refinance |
cash-out |
| 3/1
Adjustable |
$100,000
to $1,000,000 |
90% |
90% |
varies |
30 year
Amortization
Rate is fixed for three years then adjusts each year based on the 1 year
treasury +2.75% or 3.00%
Caps are 2% per year and 6% for the term of the loan. |
|
|
|
|
|
| Program
Strengths: |
Lowest
qualifying rate of all loans allows borrower to "qualify" for
the largest loan. A good combination of fixed rate security and low
starting rate. |
|
|
|
|
|
| Program
Drawbacks: |
Three years
fixed may not be enough to give one "peace of mind". |
|
|
|
|
|
| Recommendations: |
Great
program for Jumbo loans and those who plan on being in a home for 3 to 5
years. Good program for anyone who believes that rates will be lower at
some point in the next five years. |
|
|
purchase |
refinance |
cash-out |
| 5/1
Adjustable |
$100,000
to $1,000,000 |
90% |
90% |
varies |
30 Year
Amortization
Rate is fixed for five years then adjusts each year based on the 1 year
treasury +2.75% or 3.00%.
Caps are 2% per year and 6% for the term of the loan. |
|
|
|
|
|
| Program
Strengths |
The five
year lock in period offers as much security as most borrowers use (The
national average life span of a loan is 4.7 years) and at a noticeable
savings over the 30 year fixed. The 5/1 usually has a lower par rate( a
rate with 0 points) than the 5/25 Balloon and a better rate after the
5th year of the loan. |
|
|
|
|
|
| Program
Drawbacks: |
Five years
fixed may not be enough to give one "peace of mind". |
|
|
|
|
|
| Recommendations: |
Great
program for borrowers (Jumbo especially) who want added security of a
longer fixed rate term but still want to save money over a 30 year. |
|
|
purchase |
refinance |
cash-out |
| 5/25 Balloon |
$100,000 to $1,000,000 |
100% |
100% |
100% |
30 Year Amortization
Rate is fixed for five years then adjusts one time based on the 60 day
FNMA bond rate plus .625%. |
|
|
|
|
|
| Program Strengths: |
Low rate with 5 year fixed rate security.
Great program for borrower planning on paying off loan or relocating in
five years or less. Program can have extremely low rates with modest
point buy-down. |
|
|
|
|
|
| Program Drawbacks: |
Five years fixed may not be enough to give
one "peace of mind". |
|
|
|
|
|
| Recommendations: |
Great program for borrowers (Jumbo
especially) who want added security of a longer fixed rate term but
still want to save money over a 30 year. |
|
|
purchase |
refinance |
cash-out |
| 7/1 Adjustable |
$100,000 to 1,000,000 |
90% |
90% |
varies |
30 Year Amortization
Rate is fixed for seven years then adjusts each year based on the 1 Year
Treasury+ 2.75%. |
|
|
|
|
|
| Program Strengths: |
At times has a lower rate than the 30 Year
fixed. |
|
|
|
|
|
| Program Drawbacks |
The spread between the 30 year fixed and
7/1ARM is usually not that dramatic. |
|
|
|
|
|
| Recommendations: |
If you plan on being in your loan for
seven years or less, want a low rate, and are insistent on an ARM. |
|
|
purchase |
refinance |
cash-out |
| 7/23 Balloon |
$100,000 to $1,000,000 |
90% |
90% |
varies |
30 Year Amortization
Rate is fixed for seven years then adjusts one time based on the 60 day
FNMA bond rate plus .625%. |
|
|
|
|
|
| Program Strengths: |
Fixed rate security for seven years is
usually more than most borrowers need, at a rate better than the 30 year
fixed. |
|
|
|
|
|
| Program Drawbacks: |
The adjustment after the seventh year
usually yields a high rate. |
|
|
|
|
|
| Recommendations: |
A good mix of security and low rate for
those planning on being in a loan for seven years or less. |
