First time home buyers nowadays don’t have to think about the source of money for their homes this is because home mortgage  loans have made the life of a lot of first time home buyers very easy. However, as a first time homebuyer, before choosing a mortgage loan, it is very important to decide which one is right for you.  In the past decades, it was believed that a mortgage loan is a mortgage loan no matter whichever is chosen. But this theory is not workable anymore because of the many mortgage loan products available in the market.

Finding the right mortgage loan means balancing your mortgage options with your housing requirements and financial picture, now and in the future. Besides you must know that having your first time homebuyer mortgage is not just about having the lowest interest rate.  It is much more than that. And this “much more” will be determined by your personal situation.

Your personal situation and your limits to pay for monthly mortgage payments can be evaluated by answering the following questions:

• What is your current financial situation (including income, savings, cash reserves and debt-to-cash ratio)?
• How do you expect your finances to changeover in the coming years?
• How do you plan to return the mortgage loan before retirement?
• How long do you intend to keep your house?
• How comfortable you are with your changing mortgage payment amount?

The answers to these questions will give you the idea of your financial position and therefore determine your first time homebuyer mortgage.

Now the next step is to decide two key options:

• type of interest rate (fixed interest rate or adjustable interest rate); and

• mortgage length.

Interest is an unwanted burden that comes attached with every home mortgage loan. Interest is the extra amount that the borrowers have to pay, for taking the loan from the lender.  Whatever the option you go for know that whether fixed or adjustable interest rate have their merits and demerits. The adjustable interest rate mortgage is more risky because the interest rate will change, while a fixed-rate loan offers more stability because of the locked-in rate.

You will be able to pay off a shorter-term loan more quickly, but your monthly payments will be substantially higher. Long-term fixed-rate loans are popular because they offer certainty, and many people find that they are easier to fit into their budget. Although, in long run they will cost you more, but you will have more available capital when you need it, and you will be less likely to default on the loan should an emergency arise. As a first time homebuyer looking for the right mortgage your motto should be, "take a loan which carries the lowest interest rates."

For this, the first time homebuyer mortgage borrower should make a complete research of the prevailing interest rates in the market so that he does not get cheated by the home loan lenders.

Also you should also consider the aspect of the term associated with the loan that you want to undertake, otherwise you may end up paying or repaying the loan for 30 to 35 years, just because of the fact that the loans conditions had stated that the principal amount has to be repaid on fixed amount over 30 years installment basis.  The length of mortgage loan can be minimum 15 years; can be 20, or at maximum 30 years.

In the light of the issues mentioned above, it is clear that the key to selecting the right first time homebuyer mortgage loan for your needs is that the mortgage loan should fit comfortably into your entire financial picture, that is having payments within your budget and comfortable level of risk connected to it.