This is a good question, but it really depends a lot upon your current financial situation. Of course most of what your decision will be based on is how much income you make. Your steady stream of income will be the best measuring stick against which to gauge what you can afford. There is definitely also your credit and current state of debt to consider.

However, upon reviewing your situation, you will most likely find that your options will fall into two basic categories… you will either be in the prime mortgage category, or the sub-prime category.  Unfortunately there are not may options for the latter at the moment to the current mortgage and housing crisis.

What is the difference?

Well, the major difference is what you are going to have to do. If you are in the prime category, then you will probably not have too much trouble finding a good mortgage lender. However, at the current time, even prime borrowers are having a real tough time locating a mortgage to purchase or refinance a home. Much will hinder on the down payment or the loan to value or equity in their home.

In years past, consumers has a wide selection of loans to choose and pick from. Kind of like a 31 flavors mortgage selection variety at just about any lender you went to and there were hundreds to choose from. Now, lending times have changed, only a few lenders are left standing and 31 flavors is more like “Plain Vanilla Joe’s” giving even the best and most credit worthy very little options when choosing a home loan.

If you are in the subprime category, your choices are very limited and you will have to jump through some loan hoops in order to find financing. However, just because you do not have perfect credit does not mean that you cannot get a loan, it just means that you are going to have to work harder at it. 

For example, you could try the only subprime game in town and try to get an FHA loan. Or, you could try to get a co-signer. There are a few ways in which you can get a mortgage that is right for you, and for your situation, if you just keep educating yourself, improving your credit and work on your income.

Besides from that, the best way to pick a mortgage for you is to get educated online and then talk to multiple banks, friends, colleagues and neighbors to find out what he/she recommends for your current situation. Do the Ben Franklin and take your time in deciding if this is the best route for you.

This will be the biggest financial investment of your life. Please view the current foreclosure crisis as a learning lesson of what not to do with a home loan. Simply put, do not stretch yourself  thin, gamble on future appreciation and definitely DO NOT get in a home that will be way over your head.

The American Dream is about enjoying your home and life. It is not about getting in debt and fighting daily just to keep something or buy something you truly cannot afford.

So use your head and get educated about mortgages! Join our loan forum here.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.