Loan Program vs Interest Rates - When shopping for a mortgage the most important factor is the loan program, not the rate you see. Dont be misled by a lowball rate and be sure to check out the specific details of the loan program. Most mortgages have either a fixed rate (payments remain the same for the life of the loan) or an adjustable rate (payments adjust up or down in accordance with national interest rates) and a term (amount of time you have to repay the loan) of either 15 or 30 years.

Down payment requirements will differ from program to program. There are many first-time buyer programs that will require as little as 3% down, as opposed to most conventional programs that will require up to 5%-20% of the new home's sales price.

Getting a quoted rate is fools gold. Your rate is determined by many factors including loan program. Other factors include credit score, loan amount versus property value, combined loan amounts versus property value, property type, property occupancy, and last but not least income versus mortgage debt and total debt.

It is always more important to get the right mortgage loan than one with the lowest interest rate. For instance, an Adjustable Rate Mortgage (ARM) with a low teaser rate is often not right for a home buyer who cannot bear the risk of fluctuating payments.

Some loan programs have payments based on interest rates as low as 1% which can save you hundreds of dollars in minimum monthly payments, but this is not a very good option for the majority of people. The interest rate is typically adjustable each month, so you may end up paying much more in interest than on a fixed rate mortgage. It is always important to examine your loan program before making a decision, rather than just look at the monthly payment.

As a home owner you really need to evaluate your overall financial goals. Do you want the lowest mortgage payment possible or do you want a mortgage program that will build equity quickly? These are just a few of the questions that you have to answer before you start to look at loan programs and interest rates. If you want a low payment and are not concerned with building equity, then an interest only loan may be a good option for you. If you want to pay down your mortgage quickly and build equity, then you may be better off with a 15 year fixed mortgage.

In the end, whether or not the loan accomplishes your goals is what matters.

When being quoted an interest rate, make certain that you can lock it for a period long enough for your loan to close. Locking a low interest rate for 15 days is useless if your loan will not close within the rate-lock period.

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