When shopping for your first mortgage, you want to find out exactly how much you can borrow and how much its going to cost you. There are several types of mortgages available and you need to find out which one is best for your particular situation. A good mortgage advisor can help you figure this out. Here are some tips on how to find a mortgage advisor and how to work with them to get the best deal.

You can go through a mortgage banker who can loan the money directly to you or find a mortgage broker that will work with banks to find a loan for you. These salesman work on commission so its important to find one who knows thats whats good for you is also good for him.

Some advantages to working with a direct lender or banker is that you may already have an account there or know someone personally and you might get a discount on your mortgage's interest rate. Also if you will need a construction loan they can do both which should save even more on costs. If this is your first home it may help to work with a direct lender because they specialize in helping first time home owners.

A mortgage banker differs in that they dont work for any single bank, they will look for the best deal among various lenders to find the best deal. You may or may not get a better deal this way. The main advantage here is that mortgage brokers can find loans that specialize in certain types of products, such as helping self-employed applicants.

The commissions you pay for these services are usually rolled into the loan. They may come in the form of "points". For example: one point on $100,000 is $1,000. Sometimes no points are charged up front but are rolled into the interest rate. You might want to ask how these fees are being paid and how much they are costing you. For a short term mortgage of a few years I would try toavoid paying points entirely because you don't want to pay all of these costs up front.

I advise starting with your own banker first when searching for a mortgage advisor. They can review your situation and advise you as to what kind of deal they can get you. Then you can go talk to some mortgage companies and compare. Get advise from people you know or find them through advertisements etc.

Once you find an advisor there are some important things you want to find out about them:
Experience. Find someone who has been in business for several years and make sure they specialize in the type of loan you are seeking.
Qualifying. You need a broker who will pre-approve you for a loan which is not a real commitment.
Specialty. Make sure they work with people like you (say you are a first time home owner for instance) Also, if they specialize in high end million dollar mortgages that may not apply to you.
Service. Find out if the lender will be keeping the mortgage or selling it into the market. You may not get as good of service from someone else. Find out if you can make extra principle payments and how they are applied.

In the end, its important that you feel comfortable with the person you are dealing with. If not then keep searching.

Types of Mortgages

A mortgage is simply a loan that you get from a financial institution to buy a house. In this particular case - the house you are building or "buying" serves as the callateral for the loan.

Mortgages vary in the amount of the loan as well as the term associated with it. The term is the amount of time you have to pay it off. The other variable is the interest rate you pay. The rate is dertermined by several factors such as market conditions and your credit history. You will generally be paying much more interest and less principle in the earlier years of the loan. This works well for you because this interest is tax deductible and the 6X=$1.5 Million plan relies on your built in equity plus the yearly appreciation rate. The small amount of equity that you build up in a few years is just icing on the cake.

Fixed Rate Mortgages

Most over 15 year or 30 years. The payments on 15 years are 35-40% higher than 30 years.  These are great for people who are going to live in their homes for a more than 5 years and don't expect their income to go up in the future. The market condition will factor in when deciding what to do here. If the rates are currently low you might want to lock in a long term fixed rate mortgage.

Adjustible Rate Mortgages (ARM's)

These mortgages have a fixed rate for a set # of years and then they are adjusted after that. There are 5/1 ARM's, 7/1 ARM's, 10/1 ARM's etc. The 5/1 ARM might be a good option if you are planning to sell within five years. These ARM's typically offer a lower rate than fixed-rate mortgages. The disadvantage come at the end of the initial period when rates have risen, and you either can not sell or you are not ready to sell.

Down Payment

These are loans available for people who qualify for no down payment mortgages. You will want to be looking for someone who will allow you to use your builder's equity as the down payment. I've discussed this in the article on contracting your own home.

Government Programs

The government has many programs to help home owners because home ownership creates wealth, increases tax revenue as well as jobs and the economy.

Housing and Urban Developement (HUD)

Visit www.hud.gov for information on how to apply, qualify and what type of help you can get.

Federal Housing Administration

Visit www.fha.gov - a great source for first time home owners.

U.S. Department of Veteran's Affairs

Visit www.va.gov

Fannie Mae

Visit www.fanniemae.com or call 1-800-832-2345

Freddie Mae

Visit www.freddiemae.com or call 1-800-373-3343

Your mortgage is very important so you need to undestand how they work. You can find everything you need to know and save thousands of dollars by consulting the "Pocket Mortgage Guide" by Jack Guttentaj, the mortgage professor, available in most book stores. Jack Guttentaj, Ph.D Visit www.mtgprofessor.com