So, you are planning to buy your perfect house but don’t know what your options are in the mortgage department. Don’t be embarrassed about that – it is the same for most folks. Today’s mortgage industry is very complex.

To begin with, there are many types of mortgages to choose from and many options to sort through in each category. Which mortgage may be right for you is dependent on several factors. Simply stated though, the combination of your long term goals, your cash position and credit history will help narrow your choices but there will still many options to work through to determine what mortgage is right for you.

If you are flush with cash, have a strong credit rating and a well established career, qualifying for a mortgage should be relatively easy. However, for many people that is not the case. They may be short on cash, have a so-so credit score and just started a new job. For these folks the path will be tougher but not impossible.

Most mortgages differ in just a few ways. The term of the mortgage (how long it is for) and what interest rate you will pay are at the heart of it. From there it seems a little more complicated but, in most cases, what you end up with is a derivative of those two factors.

The two types of mortgages generally used today are fixed rate and adjustable.

Fixed rate loans are very popular because you are guaranteed to have the same payment every month regardless of changes in interest rates. If you are on a budget, this is a great option. Your principle and interested payments are not impacted by external forces. In addition, as your income grows managing payments will likely become easier over time.

Adjustable rate mortgage loans differ from the fixed rate type because they fluctuate based on a guidelines set forth in your mortgage documents. In most cases, adjustable rate mortgages are tied to a specific economic indicator. The lender chooses the indicator. As the indicator moves – up or down – based on the schedule determined by your mortgage your interest rate will change thereby changing your monthly payment. Generally, the home owner is protected by a "cap" on how much the rate can change at any given time.

These are just a couple of basic types of home loans. Both types have a number of variations available. In the end what mortgage is right for you may be the straight forward fixed rate approach or it may be a more complicated adjustable rate type that is generally easier to qualify for.

The best bet is to research the different types of loan you are interested in and discuss them with your broker.