Below is a general "Rule
of Thumb" to use when deciding which Xtra Mile Financial Services loan program is best for you,
and a description of common loans available to today's
borrowers.
Years you
plan to stay in the house
Recommended
program
1-3
3/1 ARM, 1 year ARM or 6 month
ARM
3-5
5/1 ARM
5-7
7/1 ARM
7-10
10/1 ARM, 30 yr fixed or 15 yr
fixed
10+
30 year fixed or 15 year fixed
Loan Programs
Advantages
Disadvantages
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
· Lower initial monthly
payment
· Lower payment over a shorter 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
· Lower initial monthly
payment
· Lower payment over a shorter period of
time
· Many balloon mortgages offer the option
to convert to a new loan after the initial term.
· Risk of rates being higher
at the end of the initial fixed period
· Risk of foreclosure if you cannot make
balloon payment or if you cannot refinance or if
you cannot exercise the conversion option
· Lower down payment
· Easier to qualify
· Sometimes you may get lower rate
· 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.
· 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
