by Daniel Xiao Wang

Created on: December 09, 2008   Last Updated: April 14, 2012

With the mortgage meltdown in America there is very little else on people's minds. Credit freeze, stricter lending, dropping home values, increases in foreclosures, rising unemployment- these are daily headlines. You may have come to the conclusion that banks are not lending and mortgages are impossible to come by.

While it is true that lending is stricter, and that some of the riskier mortgage programs are all but nonexistent, there are still mortgage programs out there for the right borrower. There is likely a program out there that is right for you.

Traditional mortgage

Traditional mortgages are the vanilla of mortgage products. They are simple and straightforward as far as mortgages go. You agree to a set payment over a fixed amount of time. The most common fixed mortgages are 15 or 30 years.

Once you sign the loan documents you have agreed to pay a certain amount for the specific amount of time. Your rate does not change, your mortgage payment does not change and after the term you mortgage will be paid in full.

It is important to note that if your mortgage payment is composed of PITI (principal, interest, taxes and insurance) payments your payment can change as the cost of insurance and the amount you pay in taxes adjusts.

Pros:

* Fixed interest rate

* Fixed term

* No surprises

Cons:

* If rates drop your rate will not fall

* You may have to pay PMI (private mortgage insurance)

* May require a large down payment

Adjustable rate mortgages

These mortgages typically start at a lower rate and after a specific amount of time, like five years, the rate adjusts. There is usually a cap as to just how much the rate may adjust so you are not completely left to chance.

In the current mortgage environment these loans are not very popular.

Pros:

* Start at a lower interest rate

* Caps on how high the rate can grow

Cons:

* The rate can grow continuously

* There is no way to predict just what your payments may become

FHA loans

The Federal Housing Authority provides mortgage assistance to low to moderate income households. The FHA will underwrite these loans with a lower down payment than what is required for a typical mortgage.

FHA loans are subject to federal, state and local limitations and are specifically for borrowers who may not meet standard credit criteria, are in a low to moderate income household and who may have experienced credit problems in the pas.

Many states also have a State Bond Loan program that provides down payment assistance for low to moderate

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