Understand loan type

Loan program	A good loan for borrowers who:	Loan description
30 YEAR FIXED RATE	- plan to live in home more than 10 years - like total payment stability	Interest rate & monthly payment will be the same for 30 years
10/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 10 years - like initial payment stability, can accept later changes, OR - plan to move in 10 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 10 years Starting the 11th year, interest rate adjusted every year, payment is subject to change every year after first adjustment.
7/23 (2-Step) or '30 due in 7'	- plan to live in property more than 10 years - can tolerate one payment adjustment OR - plan to move within 7 years - want to remain in force in case plans change	Interest rate & monthly payment remain the same for 7 years Conversion option:On the 8th year, rate adjusted to reflect prevailing rates, payment will remain same remainder of loan
7/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 7 years - like initial payment stability, can accept later changes, OR - plan to move within 7 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 7 years Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan
7 YEAR BALLOON	- plan to live in property more than 7 years - are willing to refinance at prevailing market rates, OR - plan to move within 7 years - like payment stability	Interest rate & monthly payment remain the same for 7 years At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates
5/25 (2-Step) or '30 due in 5'	- plan to live in property more than 5 years - can tolerate one payment adjustment, OR - plan to move within 5 years - want loan to remain in force in case of plans change	Interest rate & monthly payment remain the same for 5 years Conversion option: On the 6th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan
5/5 & 5/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 5 years - like initial payment stability, can accept later changes , OR - plan to move within 5 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 5 years Starting the 6th year, interest rate adjusted every 5 years (for 5/5 ARM) and every year (for 5/1 ARM)
5 YEAR BALLOON	- plan to live in property more than 5 years - are willing to refinance at prevailing market rates, OR - plan to move within 5 years - like payment stability	Interest rate & monthly payment remain the same for 5 years At the end of 5 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates
3/3 & 3/1 YEAR ADJUSTABLE RATE	- plan to live in property more than 3 years - like initial payment stability, can accept later changes, OR - plan to move within 3 years - want loan to remain in force in case plans change	Interest rate & monthly payment remain the same for 3 years Starting 4th year, interest rate adjusted every 3 years (for 3/3 ARM) and every year (for 3/1 ARM)
1 YEAR ADJUSTABLE RATE	- want to take advantage of lowest rate possible - are willing to accept yearly payment changes, OR - cannot qualify at higher rate programs	Interest rate adjusted every year, so monthly payment is subject to change every year for entire 30 year loan term

Source: latimes.com