There are a confusing number of types of mortgage loans available to borrowers today. Some borrowers tragically have signed mortgages in the past containing terms which they did not understand. Many blame mortgage brokers for misleading borrowers. However, every consumer needs to be armed with the information needed to fully understand the proposed mortgage terms on their own.

Some mortgages have what are called fixed interest rates. You get an initial interest rate and it never changes during the course of the loan. If rates decrease and become much lower than the one you have, then it is always possible to refinance sometime in the future. A fixed rate is good because it allows you to budget accurately for your housing expense.

Other mortgages have what are termed adjustable rates. Interest rates on these loans can go up as market interest rates increase. Some have built in "teaser rates" which offer a very low initial payment which greatly increases after a given period of time. These type mortgages can be very risky. Many borrowers who selected these loans found out that they could not afford the new payment after the amount increased. You should ensure this never happens to you.

Historically, most mortgages had terms of thirty years. After thirty years of payments a celebration would ensue burning the paid off mortgage papers. More recently, terms of 40 years or longer have emerged. Most experts assert that you are better off sticking with a 30 year term. If possible, it is even better to seek a 25 or 20 year term assuming you are able to meet the higher monthly payment amount.

Mortgages vary in terms of how much money you need as a down payment. In the past, most all mortgages needed 20% down payments. Some exceptions existed such as the FHA loan program. For a period in recent history many lenders lowered this requirement. Some lenders even routinely wrote mortgages with no money put down by the borrower. This might seem attractive to you.

However, with no initial equity the loan can become quite risky. If your home should decline in value, then you could be in a scenario where your home's value is less than the amount you owe on your mortgage. You then become essentially trapped in your home with no escape. Having initial equity is a smarter and safer choice. Most experts recommend putting down 20% of the purchase price as your down payment.

Many mortgages have complicated closing fees and "points" associated with them. These can increase if your credit score is not acceptable. Ideally, a borrower avoids mortgages with these types of high fees. All mortgages entail some fees at closing. When looking for a mortgage compare these fees when shopping around. Don't just exclusively focus on the interest rate. Points and fees can make an otherwise attractive loan become much less desirable.

Pay attention to the different types of mortgage loans. Each term is important and should be researched and studied. Do not rely upon others to explain terms to you. There are many free resources available online which enable you to become a smart mortgage borrower on your own. Do your research and pay attention to the fine print. This will ensure you avoid common mortgage pitfalls.