Before getting into specific types of loans, you should be aware of the difference between A loans and B and C loans. The loans called A loans are for borrowers without serious qualification problems. There are differences among A loans, but they are usually small. The relative strength of the borrower may result in an interest rate difference of.125% to.5%. This difference could also be from using the wrong lender or an incompetent mortgage broker.
If you do not qualify for an A loan, you drop to the B or C category. The B and C categories are for borrowers whose credit score or history does not allow them to be in the preferred A category. In these categories, the rate difference becomes more significant, usually 2%–3%. You will know when a potential lender tells you the rate that it wants to charge you if it is in the A category. If you are not sure, ask. If it is not, ask for specific reasons why. Then talk to a mortgage broker. Mortgage brokers have access to many lenders, where a direct lender only serves one. A competent, experienced broker should know if you can get an A loan from any lender. If not, he or she may be able to suggest some things you could do to qualify, like paying off a few small bills. Do not settle for less than an A loan before you have exhausted the possibilities of getting one.
Now that you understand the factors that go into gathering a loan and what mortgages are all about, you need to decide which type is best for you.