Purchasing your first home

If you are one of those who have finally decided to take that major step towards fulfilling the American dream of owning a house, it certainly is a mammoth step for you. As the first home buyer, if you thought selecting the house was the most difficult task, you couldn't be more wrong.

Which mortgage loan to go for as not to upset your monthly budget can be the most daunting question that needs to be solved. There would be a number of loans that you can go for but you would need to be careful while choosing one, as you won't want to either have too much burden on your pocket each month or would you want to opt for a plan that keeps you in debt until your 50's.

Basis of a Jumbo Mortgage

The prospect of more and more people investing in the economy gives it a push, that's the very reason why you find government agencies being a little more generous towards home mortgage loans.

As a first timer, you may want to go for:

• Tax credits offered by the government for the first time buyer.
• Paying of your closing costs entirely or partly by the lender.

you can easily see, the conditions on such loans are easier than other loans for the reasons mentioned above. Moreover, with closing costs being paid by the lender themself, it is easy to see that client retention for future business remains a top priority for lenders during the first home loan.

Types of First Home Buyer Loans

There are four types of home loans that are available for first timers and one needs to make a choice between the options below:

• Conventional or "fixed rate" loans
• Federal Housing Authority (FHA) Loans
• Adjustable Rate Loans
• Veteran's Administration (VA Loans)

Conventional loans are the best pick among all home buyers loan options. You get to purchase a house with a fixed interest rate for a fixed amount of time. That period is generally anywhere between 15 to 30 years for these type of loans.

The second type of loan is FHA loans. So, what is a FHA loan? This loan too is fixed or adjustable with the difference lying in the fact that it is backed by FHA: it's lucrative for both the lender and the buyer, as it is the government that issues the loan and generally comes with smaller down payments (less out of pocket for you). Among all the home buyers loan options, FHA loan rates are one of the lowest.

The third type of loan available is known as an adjustable rate loan. These loans are a great option for those who wish for lower fixed interest rates in the beginning 2 to 5 years, after which the interest rate changes according to the market indexes. This distinction of adjustable rate loans allows you to get into a home for a low variable rate initially and then accept a possible higher fixed rate later on. This is yet another type of home buyers loan backed by Veteran's Administration or the Federal Government.