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 year ARM
• 6 month ARM
• 1 month  ARM

• Lower initial monthly payment
• Lower payment over a shorter period 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

Balloon Mortgages

• 7 year
• 5 year

• Lower initial monthly payment
• Lower payment over a shorter period of time
• Many balloon mortgages offer the option to convert 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