Are you considering buying a home for the first time? There are several different mortgage options available, and you need to educate yourself on all of them. I will attempt to assist you in this article, however it would be wise to consider purchasing some books on this subject or visit some local lenders for free literature. I would also suggest asking your local lenders to pre-qualify you for a purchase. This will allow you, the real estate agent, and sellers to know that you are serious and that you can get the mortgage needed to cover the sales price. Being pre-qualified is almost as good as a cash buyer in the sellers eyes.

Once you are pre-qualified for a certain amount the next step would be to decide which type of mortgage and which term will be most advantageous for you. Most lenders have the same options available, but every once in a while you will find unique loan programs that might suit your financing needs. Be sure to obtain complete information and if you are not clear on any points ask the lender to elaborate until you have a firm understanding of how this program works, and why the lender thinks this would be a good mortgage option for you.

Now let's discuss the main types of mortgages. You will either be approved on a Conventional Loan or a FHA or other Government backed loan. What's the difference? Just what it sounds like, FHA and other Government backed loans give the lender the assurance they will not loose their investment in the event of foreclosure. A Conventional Loan the lender assumes all responsibility and will most likely suffer a loss in the event of a foreclosure. Next you must decide what your goals are and how the mortgage that you choose will be beneficial in reaching those goals. Questions that you might want to ask yourself are...

1) Was I pre-qualified for enough money to buy the home that I want?

2) How long do I want to finance my mortgage for?

3) What type of rate will work best in my situation?

Now let me explain how answering these questions can help you. You probally already know that the longer you finance your home the more money it costs you. But what you may not know is exactly how much more it costs you. Example: $125,000.00 mortgage at 6.5% APR fixed rate 30 years vs 15 years ( At 30 years your monthly payment would be $790.09 and Total Interest would be $159,426) (At 15 years your monthly payment would be $1,088.88 and the Total Interest would be $71,000.00)

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