These Choices Will Make a Difference in Your Loan

1. Term of Mortgage - Mortgage terms are often 15 yrs, 20 yrs, or 30yr terms. A 30 yr term will have lower monthly payment than a 15 yr term if you borrow the same amount.. But for a longer number of years you will pay more interest in the long run.
2. Fixed rate or adjustable rate loans - Fixed rate loans let you lock in a lower rate for as long as you have the loan. This is frequently an excellent choice if the interest rates are lower. An ARM (adjustable rate mortgage) is created so that interest rates will rise as interest rates increase; however they frequently offer a lower rate in the 1st yrs of the loan. ARMs also frequently will have a limit on how much the interest rate can increase, also on how often they can be increased. ARMs can be a good choice if interest rates are high or if you anticipate your income growing considerably in the up coming years.
3. Balloon loans. Balloon loans may offer very low interest rates for a brief period of time. This may only be for 3 to 7 years. Payments often only cover only the interest. This means the principal owed is not reduced. Also this type of loan may be a good option if you think you will sell your home in a few years.
4. Government backed mortgages . Government backed mortgages, sponsored by agencies such as FHA (Federal Housing Administration) or the U.S. Department of Veterans Affairs offer special terms, such as reduced down payments or lower interest rates to buyers who qualify.
   

Small variations in interest rates, in the amount of the loan ,or terms can significantly affect what you pay monthly.
To help determine your monthly payment for different loan amounts, use Fannie Mae’s mortgage calculators online.