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Pros
- Interest rate fixed for life of loan-good if interest rates increase
- Good for use in times of inflation and for long-term ownership
- Underwriting flexibility--lender's may negotiate or eliminate
certain loan fees
- PMI is usually less expensive than with ARM or FHA
- Lender may self-insure the loan if borrower has difficulty in
obtaining PMI
- Lender can fund a portion of closing costs for a higher interest
rate
- Appraisals meet lender's guidelines, not strict FHA or VA standards
Cons
- Interest rate fixed for life of loan-bad if interest rates decrease
- Interest rates set by lender and may exceed FHA and VA
- Origination fees and loan costs may be higher
- Most loans with greater than 80% LTV require PMI
- May require larger down payments
- Qualifying ration - 28%-36%
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