A traditional mortgage is also known as conventional mortgage with a fixed interest rate. Generally this loan will be for eighty percent of the mortgage. In order to qualify you generally need a down payment of twenty percent on your home. It has a term of ten, fifteen, twenty or thirty years. The payments will be the same for the life of the loan.
This is the best mortgage loan for the consumer. You will lock in a rate, and have set payments. If you qualify for this loan, you are most likely in a position to afford your home. When you are looking at a traditional mortgage you may be given the opportunity to purchase points for a lower interest rate. Generally you are going to pay for those points close to what you would save on interest.
If you can manage the higher payment on a fifteen year loan, you will be in a much better position. This will shorten the length of your loan and dramatically reduce the amount you end up paying on interest. This may mean buying a smaller home or tightening up in other areas, but over time it will benefit you greatly.
You should keep your mortgage payments at about twenty five percent of your pay. This will prevent you from becoming house poor. You should not borrow more than this, because you can make it difficult to meet your other payments as well. You may need to scale back your expectations in order to follow this rule.
