Home Mortgage Loan Which is Best for You?

There are so many different types of mortgages to choose from that you need to be a student of the business to figure it all out. I recently saw an ad boasting of over 100 products to choose from. It can be confusing for sure. So the need to do your homework is paramount. There are all sorts of free resources available on the internet and elsewhere to help guide you thru this very important time in your life-deciding which mortgage is best for you.

There are two types of mortgage programs conventional and government. All mortgages can either have fixed mortgage rates or variable mortgage rates.

You can look out for various government programs available for consumers today including FHA (HUD), VA, and RHS. Additionally there are state and local housing programs that vary by locale.

Conventional loans are either fixed or variable mortgage rates.

In case you are interested in conventional loans, as mentioned earlier, you have two choices namely fixed mortgage rates & variable mortgage rates.

a) Fixed Mortgage Rates: Today fixed mortgage rates are available with 15, 20, 25, 30, 40 & even 50 year terms. The amount of interest is directly proportional to the term you choose. The longer the term the more interest you will pay; the shorter the term of the loan the lower the mortgage rate will be. For instance, with a 15-year term your mortgage rate might drop as lower as half than a 30-year term. Over the course of the loan this will save you enormous amounts of money. The payments on a monthly basis will be higher with a shorter-term loan however.

b) Variable Mortgage Rates: As the name implies have varying interest rates depending on the type of product and there are a wide variety. Some of them are; negatively amortizing loans, two step mortgage, convertible ARM, lender buy down, fixed period ARM's, and Graduated Payment Mortgages.

There are a variety of situations where a variable rate loan might actually be best for you and you could benefit from using one.

Other types of loans are Interest only loans with a balloon payment, reverse mortgages, and Jumbo loans.

With so many programs to choose from it is important to find the one that is best suited for your needs. The major determining factors are how much of a monthly payment you can afford (not to be confused with how much you qualify for) and how long you plan on staying in your house. There are pros and cons with each program. There is bound to be one that suits your situation better than the others.

Your quest for the BEST deal on a home loan starts with knowledge and information-you can't have too much of either.

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