Choosing the Right Mortgage for Your New Home

It's the fact that a new home mortgage is probably one of the largest financial obligations most people make in their lifetime.For this simple reason, it is very important for one to select the right mortgage.I believe one would want one that provides payments that will fit within his or her budget and helps him or her achieve the goal of home ownership.
--What are the mortgages types are available?
There many different types of mortgage but the major types of loans that borrowers find available include fixed rate mortgages, adjustable rate mortgages, interest only mortgage, negative amortization mortgage and balloon payment mortgage. Each of these new home mortgage types has different advantages and disadvantages. Selecting the right mortgage for your particular financial situation should be done after reviewing the major factors in each of the above loan types to find one that fits. Be sure you have looked at the immediate results of a specific mortgage type as well as the long term effects of the loan. Three years into the mortgage payment period is not the time to discover you can't afford the loan.
--How much can you afford for mortgage?
This is a critical factor in choosing a new home mortgage that will enable you to meet your financial obligations easily without undue financial stress on you and your family. Lenders often use a guideline for affordability of your proposed home purchase based on 2.5 times your annual salary, but this figure can vary depending on the lender and upon the level of your income. It may also be affected by other characteristics such as your credit score,the economy of the region or the country, and whether it is a new home or a pre-owned home.
--What is your credit Score Line
Your credit bureau score often called the FICO score is a representation of your creditworthiness as perceived by the three major credit bureaus. Lenders often use the FICO score in determining your qualification for various types of mortgage loans. When you have a low FICO score, the type of new home mortgage that you can qualify for may be limited. Conversely, you have more options both in the type of mortgages that are available to you and the terms of the mortgage when your credit score or FICO score is high.

--Saving money on your mortgage

No matter which type of new home mortgage that you select, there are several ways of reducing the cost of the mortgage.For example,you can lower total interest costs by reducing the term of the loan such as getting a 25 year loan instead of a 30 year loan. This can save a significant amount in overall costs.

--What other issues factors in into the type of mortgage selected?
some other factors are also very important in selecting the mortgage type for which you should apply. For example, your past history in managing your credit obligations may be a factor in choosing your new mortgage In addition to reviewing your ability to repay the new home mortgage. You will also need to look at your debt load and whether you have excessive credit card debt or other payments. Your job history may be reviewed to see whether you typically stay with an employer or whether you bounce from one job to another. If you are the type that changes job within every two years, you will probably need to be able to explain why that was necessary to a potential lender.