Which mortgage loan is right for me?

Once you have taken the time to determine how big of a mortgage you can afford you need to investigate the type of mortgage loans that are out there and which one best suits your needs.

Now, let’s look at the basic types of first time buyer loans:

Fixed Rate

A fixed rate mortgage is the most traditional. Basically it allows you to borrow a certain amount over a designated period of time at a fixed rate of interest. You then pay the same monthly installments for the life of the home loan. As far as first time home buyer loans go, this type of mortgage helps you easily budget your repayment.

Adjustable Rate

Mirroring fixed rate first time home buyer loans is the adjustable rate mortgage. Here you can also borrow a designated amount of money over a specified time frame. What is different about this kind of mortgage is that the interest rate is not fixed but is instead adjustable. In other words, it’s the kind of first time home buyer loans that float.

The advantage is that the interest rate at the beginning of the loan period may be lower than the fixed rate but on the flipside, it can be rather difficult to budget for. With a fluctuating interest rate you’re at the mercy of the economy.

Hybrid

This type of mortgage tries to fill the gap between the disadvantages of both fixed and adjustable rate mortgages.

The hybrid mortgage is among the best first time home buyer loans on the market as it allows you to set the interest rate during the first part of the home loan and then switch it to an adjustable (variable) rate later on.

The advantage of a hybrid loan is that you can budget for your repayment during the early, most expensive time of your home purchase. A time when you traditionally have many more costs associated with establishing your new home environment.

The downside to this type of mortgage as far as first time home buyer loans go, is if the rates float much higher than your fixed rate when the switch takes place, you may find yourself with a considerable higher repayment each month.

The bottom line when searching for first time home buyer loans is to invest in doing your homework. Compare lenders and loans to get the best mortgage loan for your needs.