Buying a home is one of the biggest financial decisions you will make. There are a lot of loan packages available nowadays and it can get a little confusing when you go to choose one. Here are some tips for helping you make that decision:

Maybe you decided to buy a home but aren’t sure which loan to take out. Home mortgage loans are out there, but there are various types of these loans for fitting in with specific circumstances. It’s crucial that you know and understand just what home mortgages are. They are loans that are secured against your property for repayment of that loan. Home mortgages come in two main types – Conventional and Government.

Conventional Home Loans – Conventional home loans are loans made to buyers from mortgage companies, banks, and various other lenders. They have rates of interest that depend on the current market. They come in these following types:

Fixed Rate Mortgages – This kind of loan has an interest rate that does not change. The payments are made monthly and are fixed for the life of the loan. The market does not affect these loans or your payments. They can be for 10 years or as long as 40 years. For first time home buyers these are great loans, unless you take one out when interest rates are high. Then it could turn out to be a disadvantage.

Adjustable Rate Loans – These loans have interest rates that fluctuate with the market. They usually start off having low rates, especially when you compare them to fixed rate mortgages, but this can change. These loans can be beneficial but carry a bit of risk.

VA Home Loans – These loans are offered specifically to employees of the government or service men and women. They carry smaller down payments and much better terms for adjustable and fixed rate loans. These loans are guaranteed.

Balloon Loans – These loans are offered as fixed rate loans for the short term, and usually after about 7 to 10 years there comes a lump sum due. These loans are usually based on a schedule of amortization that is around 30 years. The interest rate for your term will be low like with an adjustable rate loan. These loans are easy to qualify for. Bad credit or poor credit borrowers are able to qualify. The downside is the lump sum payment that is due at the end.

Rural Housing Services Loans – These loan programs are offered by our U.S. Dept. of Agriculture. They are designed for rural residents and are government guaranteed and don’t require a downpayment.

Government Home Loans – These loans are guaranteed and insured. They target specific groups looking to buy new homes. These are channeled through private organization and rely on the sponsorship of the government.

Home Equity Loans – Home equity loans enable borrowers to draw cash from their home equity. This can be an adjustable loan or a fixed rate loan.

FHA Loans – These loans are initiated by the Federal Housing Authority and are run by the government. They are designed to help people qualify for a home loan much easier than with conventional lending institutions. They require lower down payments and have lower interest rates.