One of the greatest needs for a loan is for purchase of home. This is therefore an area where many lenders are competing to offer the best deals to the customer. It is also an area where careful planning is required before choosing an option. It is advisable to seek loans from relatives and only take out a mortgage when no other option is available. This is because a mortgage is a long-term commitment to pay a certain amount of money, and one may or may not be able to do so.

Most home loans are standardized to comply with rules established by the Federal National Mortgage Association, which helps to compare the existing rates in the market. Since competition is high, lenders often offer perks, including low interest rates on the loan. There is also the option of government subsidized mortgages, which have very low or no down payment options.

Most loans are divided into four basic parts. The first part is the repayment of money that one has actually borrowed. Interest forms the second part of the loan, which is added to the principal sum for borrowing. The third part is meant to cover the property from natural disasters and other hazards. The final part is the taxes to be paid to the authorities.

One can also get information from newspapers and websites on the current rates. If you are still not able to decide, it is better to consult a mortgage broker who can advise you on all the options and help you choose the best. To begin with, one can calculate if one is eligible for a mortgage. In case the amount that one can afford is much less than the cost of that home you want, then you may have to wait.

If one has a questionable credit background one may be subjected to a higher down payment, or your request may even be denied. But one should not give up the search for a mortgage as many lenders offer attractive options for people with bad credit.

If one does not want to pay high initial payments, one can find mortgages which charge anywhere between 5 to 15 per cent. However, one will be paying more in the long-run with interest rates and loan fees than someone who has paid more initially.

Finally there is detail regarding closing costs. These costs include various fees and processing charges applied by the lender. You must be able to keep aside money to pay for these costs. Typically, this rate may be in the region of around three to four per cent of the cost of your home.

For acquiring homes, the government may also give loans. These are available for former military personnel and for citizens. These require very little or no down payment. In the long-run, fixed interest rates are better when compared to floating ones. This is only true if one gets into a mortgage agreement when the rates are low and one needs a long period of time to repay the mortgage. This allows one to take full advantage of the low entry rates and one need not worry about rates going up somewhere in the future.

There are several options for a first residential loan, including family and commercial and government subsidized mortgages; brokers are often useful to advise one on getting a first mortgage.