The type of loan you select for your new home can affect your amount of down payment, the total amount you pay, and how much home you can purchase.

Conventional Mortgage: This is normally a fixed-rate mortgage and can be made directly from the local lenders. It takes less time to process than FHA or VA loans. They can be 15, 25, 30 years or more. The 15 year fixed rate is usually offered at a lower interest rate. Your payments would be higher but equity build up is much faster and you save thousands of dollars over a 30 year mortgage.

ARM’S-Adjustable Rate Mortgage: Interest rate is adjusted periodically to market rate and is usually lower initially. However, if interest rates increase, your monthly payment will increase. If interest rates decline, your monthly payment will decrease. When considering an adjustable rate mortgage (ARM) the following points should be reviewed:
• The initial interest rate.
• The index that the new rate will be measured by.
• How often the rate will change.
• Whether there is a cap (or maximum) amount that the rate can vary at each adjustable time.
• Whether there is a cap (or Maximum) interest rate to the entire loan.

The average American moves every 7 years…
If you plan on moving every 7 years you might want to get a 7 year arm on a 30 year amortization schedule to keep your mortgage payments lower.

FHA - Federal Housing Administration: This federal agency was established by Congress in 1934. It insures mortgage loans made by FHA-approved lenders on homes that meet the FHA standards in order to make mortgages more desirable investments for lenders.

VA - Veteran's Administration: A Federal agency which in 1944 established a loan guaranteed program to encourage private lending agencies to give liberal mortgages to honorably discharged veterans or their widows. You need to get a Certificate of Eligibility from the Veterans Association before you can apply for this loan. The local banks are very helpful in helping secure this financing which can be a 100% loan in some cases.

The majority of loans made by Banks, Savings and Loans, and Mortgage Brokers are the conventional type. This means that the loan is a private transaction between you and the Lender. The FHA and VA mortgages are government backed mortgages. This means that if foreclosure is necessary the lender will be reimbursed by the government agency for allow part of his loss.

Owner Financing - Land Contract - Contract for Deed: In some cases the seller may be willing to finance your purchase.

There are new types of financing happening weekly, including interest-only loans, reverse mortgages for the aging, etc. Talk to your Banker or Realtor for any ideas you might have that will work best for you in the situation.