With a huge selection of products available, it is vital you choose the best program for your situation. Payment, length of term, time in your home and penalties are just a few concerns homeowners may have. Preferred Lending Group loan consultants are able to discern what is and is not necessary
for you based on your circumstances, goals and paperwork. With your input, we tailor your product accordingly. The following are loan products available for your consideration:

Fixed Products

A fixed product means you have the same rate for the term of the loan. For example, if your
rate is 6% and your term is 30 years, then your payment will be a fully indexed payment
at 6% for 30 years and will always be the same. Possible options include:

•  30 year fixed
•  20 year fixed
•  15 year fixed

The longer the term of your loan the lower the payment will be. Conversely, the shorter
your term, the shorter time in which to pay it off and the larger the payment will be.
- Pro: Your payment will always be the same.
- Con: If you do not plan to stay in your home for very long, you could be throwing away
money monthly to guarantee your rate. Because it is fixed, the rate will be higher and you
may pay more than you need to.                       

Adjustable Rate Mortgages or ARMs

As the name implies, adjustable rate mortgages have the potential for your payment to
change or adjust based on a margin and index usually after a specified fixed period. The
adjustment depends on the loan terms which will be outlined as follows:

• 2/28, fixed rate for 2 years
• 3/1, fixed rate for 3 years
• 5/1, fixed rate for 5 years
• 7/1, fixed rate for 7 years
• 10/1, fixed rate for 10 years

These then can adjust
              Monthly
              Every 6 months
              Every 1 year

-Pro: If you plan to stay in your home for only a few more years, an ARM will be the most
beneficial to you.
-Con: The adjustable period may increase your monthly payment after the fixed time period.

PayOption

The 1-month PayOption ARM is the most flexible product available. This product offers
you 4 payment options on each bill you receive for 5 years. Whichever you pay is up to you.
The payment options are as follows:

•  Minimum payment - The lowest payment based on the initial start rate, usually 1%

•  Interest-only - Pay only the interest portion of your payment

•  15-year amortization - pay off your loan as if it were a 15-year payment schedule

•  30-year amortization - pay off your loan as if it were a 30-year payment schedule

- Pros: The 1% payment allows financial freedom to invest in other areas or free spending
money for other purchases. Also, the fully indexed rate is usually much lower than an ARM or Fixed rate.

- Cons: In paying the minimum payment, your principle balance may increase.

For optimum results, mix your payment schedule to try to average covering both interest and principle

Home Equity loans and Home Equity Lines of Credit

Both loans are a second mortgage on your property.

Home equity loans are fixed and include both principle and interest.

- Pro: Your payment will be paying down your principle balance.

- Con: Their payments will be higher than a line of credit.

A Home Equity Line of Credit, HELOC, is special in that it is set up as a credit card.
It allows you to draw funds whenever you need money during your draw period. There is a minimum monthly payment based on how much you have drawn and is an interest only payment.

- Pros: If you do not need cash immediately, it can be available to you at any time.
Additionally, you only pay a payment for any amount you have drawn. Furthermore, its rates
are usually lower than a credit card.

– Con: Unless you pay more than your minimum payment, you will not be decreasing your principle balance. Additionally, a HELOC is adjustable and fluctuates with the PRIME index. Whenever PRIME increases, so will your payment.

Interest Only
Your mortgage payment is a blend of principal plus interest. The principal goes toward
repayment of your mortgage principle and the interest is what the lender charges for the
use of the money.

When you take out an interest-only mortgage, you pay only interest every month for a fixed
period of time. Once this expires, you have to repay all of the principal, plus interest over
the remaining term.

- Pro: You can free up a lot of money each month with an interest-only mortgage. It makes
a home more affordable during the first few years than a conventional mortgage that charges
both interest and principal.
- Con: When you take out an interest-only mortgage, whether it's for the purchase of a new
home or to refinance your current home, you must keep in mind that when the interest-only
period expires, your payments will increase.

Biweekly payments

Biweekly payments are when you make a payment on your mortgage every two weeks
instead of once a month. Each of these payments is equal to one-half of a normal monthly
payment. By making biweekly payments, you end up making an extra payment over the
course of each year. You also pay less interest in the long term , because your payments
are applied to your principal balance more frequently.

- Pro: You will payoff your loan quicker.
- Con: You will have to pay every two weeks.

40 year term

A 40-year mortgage is a conventional mortgage, but instead of repaying the principal
over the standard 15, 20 or 30 years, you pay it off over 40 years.

- Pro: Your payment will be less than a 30 year term payment.
- Con: It will take you 10 more years to payoff your loan.