Brush up on these mortgage basics to help you determine the loan that will best suit your needs.

• Mortgage Terms.  Mortgages are generally available at 15-, 20-, or 30-year terms.  In general, the longer the term, the lower the monthly payment. However, you pay more interest overall if you borrow for a longer term.
  
  
• Fixed or adjustable interest rates.  A fixed rate allows you to lock in a low rate as long as you the the mortgage and, in general, is usually a good choice if interest rates are low.  An adjustable-rate mortgage is designed so that you loan's interest rate will rise as market interest rates increase.  ARMs usually offer a lower rate in the first years of the mortgage.  ARMs also usually have a limit as to how much the interest rate can be increaed and how frequently they can be raised.  These types of mortgages are a good choice when fixed rates are high or when you expect your income to grow significantly in the comming years.
  
  
• Balloon Mortgages.  These mortgage offer very low interest rates for a short period of time -- often three to seven years.  Payments usually cover only the interest so the principal owed is not reduced.  However, this type of loan may be a good choice if you thinnk you will sell your home in a few years.
  
  
• Goverment-backed loans.  These loans are sonsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veteran Affairs (www.va.fov) and offer special terms, including lower down payments or reduced interest rates to qualified buyers.
  

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.  For help in determining how much your monthly payment will be for various loan amounts, use Fannie Mae's online mortgage calculator.