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EQUAL HOUSING
OPPORTUNITY
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Compare Loan Programs. Which Loan Is Right For You?
30 Year Fixed Rate This is the most popular and conservative loan program. Good if you are not planning
on moving or refinancing for at least 10 years and feel rates will increase over this time, or if you don't
expect your income to increase over the next several years. Historically most people move to a new home
every 5 – 7 years.
Pros Cons
The interest rate never changes
Stable monthly payments
Tax deduction - mainly interest for first 15 years
Practical for fixed incomes
20 Year, 15 Year and 10 Year Fixed Rate Very similar to the 30 Year loan. May be right for you if you want to own your home sooner or are expecting to stay in this home when you retire and don't wish to start retirement with a lot of debt.
Pros Cons
The rate and payments never change
Pays off loan more quickly
Better rate than 30 Year Fixed
2, 3, 5, 7 and 10 Year Adjustable Rate Mortgages (ARMs) Also known as 2/28, 3/1, 5/1, 7/1 and 10/1 ARMs. These 30 year loan offer a fixed "teaser rate" for the first 2, 3, 5, 7 and 10 years respectively and then the loan becomes an adjustable rate for the remaining years of the loan. Quite popular for those looking for low start rates and are not planning to keep the home more than the fixed term of the loan.
Pros Cons
Low fixed start rate and payment for the initial period
Rate increases have "caps"
Good interim loan if your situation will be changing
Interest Only An aggressive ARM option. Initial interest only (no principal reduction) period is 1-10 years etc. followed by a higher fully amortizing payment for the remainder of the loan term. With extra payments, less interest is paid over loan term and equity increases faster.
Pros Cons
Very low start rate and payment for the initial period
Increased cash flow
Good loan if your situation will be changing
Option ARM* The most aggressive of the ARM options. Quite popular for those who need increased monthly cash flow or looking to free up money for rental properties or other investment opportunities. Payment flexibility, you can pick your payment (deferred interest, interest only, principal and interest or 15-year amortization). Can pay monthly or bi-weekly for increased amortization.
Pros Cons
Most flexible mortgage available
Extremely low payment rate and low note rate
Payments fixed for 12-month increments
Increased cash flow
HELOC (Home Equity Line Of Credit) A second mortgage option that is popular for debt consolidation and/or home improvement and usually tax deductible. Good when you have a first mortgage that you do not want to refinance.
Pros Cons
Works like a credit card
Good for emergencies
Payments decrease as balance decrease
Fixed Rate 2nd Mortgage A second mortgage option that is popular for debt consolidation, home improvement or loan term debt purchase (car, college etc.) and usually tax deductible. Good when you have a first mortgage that you do not want to refinance or do not an adjustable rate.
Pros Cons
The interest rate never changes
Stable monthly payments
Practical for fixed incomes
40 Year Loan Term A 40 year loan term stretches payments out over 40 years. Even with interest rates rising, using a 40 year term lessens the impact. A 40 year loan term is an option on many different types of loans. Examples; 40 year term that is fixed for the first 30 years or a 40 year term that is fixed for few years, such as 10 years
Pros Cons
Lower payments than 30 year
Qualify for larger mortgage with lower payment
Reverse Mortgage* A mortgage that is the reverse of a traditional mortgage. Instead of the borrower making payments to the lender, the lender makes payments to the borrower, increasing the owner's debt in the property as time goes on. The borrower gets to stay in the house and doesn't have to pay back the money as long as they continue to live in the home. When the owner dies or moves away, the house can be sold, the loan paid off and any leftover money goes to the living owner or the designated heirs. Contrary to popular belief, the bank DOES NOT own the home and the heirs do not have to sell the house - they can either pay off the reverse mortgage through their own funds or a refinance as long as they do it within six months of inheritance.
Pros Cons
Alternative to home equity lines
Turns equity into tax-free cash
Different options for receipt of money
Increased cash flow
So whatever your needs, ADL Mortgage has the program to fit every unique situation.
*FHA, VA, Reverse, Option Arm and Private Money are not available
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Higher interest rate than other mortgages
If rates go down, your rate stays the same
Statistically no one keeps a house for 30 years
Higher monthly payments than any other mortgage
If rates go down, your rate stays the same
Less interest tax deduction
Rate & payment can change after initial period
Can have more risk than other loans
If you keep the house, you may have to refinance
No principal reduction during the initial period
No equity if sold or refinanced during initial period
Payment will increase after initial period
Payment increases every 12 mos. to note rate
Principal could increase during early years
Usually has a prepayment penalty
Payment increases any time the index increases
Payment increases when ever balance increases
Can have prepayment penalty to close line
Higher interest rate than first mortgages
If rates go down, your rate stays the same
Higher payment due to shorter amortization
Higher interest rate than other mortgages
Does not affect the size of an interest-only payment
More interest is paid over the life of a loan
More expensive than traditional mortgages
Higher interest rate than other mortgages
Might affect other retirement benefits
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Residential & Commerical Mortgages
