Before taking out a mortgage, it is important to consider your financial situation and research the many options in the market. Competitive rates are increasing with the number of people seeking loans, so you may need the help of a mortgage broker to inform you of the best deals around.

To start with, you must calculate how much can you repay. The standard rule is that your annual repayment of the mortgage should not be more than 27 per cent of your gross income. You can also set aside around 2 per cent of your gross income to account for unexpected costs. This means that you must be able to repay the loan under any circumstances, without exception.

If you have good credit together with a regular job, you can be eligible for a loan with a down payment of little as four percent. Further, if you are married and your spouse is also employed, things may get even easier for you. However, if you are a single parent, you may find it tough to secure a loan.

If you have bad credit though, you need not worry. You can get a loan insured by the Federal Housing Authority, where the eligibility criterion is quite inclusive and the interest rates charged are often less than a quarter of a point higher than those in the conventional market.

In a market where there are thousands of schemes and even more rates, it becomes difficult to make a decision which to choose. This should not worry the inquisitive and research-oriented customer though, who can study the market and decide whats best. However, for those who are not able to, the neighborhood broker can provide this service for a reasonable fee. He will guide you through the plethora of schemes and help you to make a sound decision by understanding your needs and financial constraints.

For those who cannot pay a large down payment, private mortgage insurance seems to be needed. Well, not any more, as some lenders have now merged the insurance premium into your monthly premiums. This helps as the amount then becomes tax deductible.

If you have taken out a fixed loan and find that the interest rates have dropped after some years, you can go for refinancing. However, if you are not able to negotiate for a reduced refinancing option, you may end up paying almost as much as you did the first time.

Good luck researching and financing your first mortgage loan!