Buying a home is a big step in Sacramento, California but with all the mortgage options available, it may be an even bigger leap. Buying a home is an investment in the future, so taking the right steps will ensure that you are able to get the most out of your purchase when it comes time to pay it off. A little bit of foresight goes a long way toward easing the process. Here are some helpful tips and information on home mortgages for first-time home buyers. The need to research before applying anywhere for a loan Do your research. Your mortgage options should begin with a basic understanding of how a home works. You need to understand how the interest rate affects the cost of borrowing money, as well as understanding the different types of mortgage programs available to you. If you don't know what these terms mean, ask someone in your local real estate community for help. They can explain it to you in layman's terms, making it easier for you to understand when you are discussing your mortgage with your broker or loan officer. Important factors to consider for interest rates When it comes to interest rates, there are two important factors that you need to understand. The first factor is the level of risk you are willing to take. If you choose a fixed-rate mortgage, you are essentially putting your entire future income into the loan. Depending on whether or not interest rates increase over the course of the loan, you will either end up owing more money or less money, and your lifestyle will either be made harder or easier. Fixed-rate mortgages are usually only recommended for people who can comfortably afford to make monthly payments for the duration of the loan. The second factor that needs to be considered before you apply for a mortgage is the amount of money you are able to borrow. The amount of money you can borrow will be determined by your income, your debt, and the interest rate. These factors will help you decide on the amount of mortgage you can qualify for based on your financial situation. In addition, your income and debt both affect your eligibility for a mortgage loan. Those with strong credit are usually eligible for a lower interest rate, and those with lower credit are sometimes denied outright. In order to get the best rate possible, you have to know what your financial goals are, how much you can reasonably afford to spend, and the lowest balance you would like to have in your first home. Choose between a fixed rate or an adjustable-rate mortgage After knowing how much you can afford to spend on your down payment and mortgage interest rate, you must determine whether or not you want to choose a fixed-rate or an adjustable-rate mortgage. Each type has its advantages and disadvantages. For instance, while an adjustable rate mortgage is often the choice of borrowers because they can choose to pay the interest rate over a set period of time or choose to tie their interest rate to the prime rate, a fixed rate mortgage is usually better for borrowers who can budget and plan for changes in the mortgage market. Ultimately, it is a personal decision as to which type of mortgage is the best for you, and you should seek a mortgage consultant's opinion on this matter. When you are ready to purchase your new home, one of the first things you should do is look into getting a home mortgage loan. Although there are many different types of mortgage loans available, the main types are the conventional mortgage and the FHA-insured mortgage. Both of these loans are guaranteed by the federal government. While the FHA-insured mortgage is preferred by most buyers because it is more flexible than the others, both types of mortgages have their pros and cons. To be able to choose the best mortgage loan for your needs, you will need to spend some time researching each type of mortgage to determine its pros and cons. The benefits of FHA-insured mortgages One of the main benefits of an FHA-insured mortgage is that the federal government will insure the interest rate and the principal. It is important to remember that when you are purchasing a home, interest rates are often very unpredictable, and you could end up with a higher monthly payment even if you choose a low-interest rate. A high-interest rate means that you will pay more money in the long run, even after taking out a mortgage loan. However, if you choose a low-interest rate on your FHA-insured mortgage loan, it will help to reduce the amount of money that you will have to borrow in the future. When looking for mortgage loans for first-time home buyers, it is wise to get at least three quotes for the lowest possible rates. You can use an online mortgage loan rate calculator that will allow you to quickly compare the different mortgage offers that you are considering.