The ease of acquiring home loans is long gone. Regulatory agencies are monitoring the lenders more closely than ever before. The current soft mortgage market was caused by irresponsible lenders approving inappropriate loans to unqualified applicants resulting in a phenomenal number of foreclosure actions.

It is important to know something about the different types of home loans that are available in the mortgage marketplace and don't try to get a "goodlooking" home loan for an amount that is more than you can actually afford just because you are buying more home than you really need.

Three of the many available home loans are: The Adjustable Rate Mortgage (ARM) which is probably the riskiest home loan available in this marketplace. The Conventional Fixed Rate Mortgage which is a safe option because you will always pay the same monthly amount for the life of the loan. Federal Housing Administration (FHA) or Veterans Administration (VA) home loans which the most safe and secure selections because they are backed by a guarantee that insures payment of the remaining amount if the borrower defaults on the monthly payments.

An ARM is not the best option unless you plan to keep your home for less than 5 years. This low interest rate might be fixed for 1-7 years. After that, it becomes adjustable, changing on a predisclosed period and exposing the borrower to "sticker shock" . . . big time.

The Conventional Fixed Rate Mortgage is going to do exactly as its name states. This home loan payment stays fixed with the interest rate secured when the loan was approved. The monthly principal and interest payment remains constant for the life of the loan.

Finally, the FHA or VA home loan borrower is welcomed by lenders. They know the amount of the loan will be paid in full no matter what happens to the borrower during the loan period. These two loans are generally at fixed interest rates slightly higher than the conventional home loan because of the guarantee. The closest comparison of the role of the FHA and the VA in the lending process would be that of an insurance provider. The actual lender would be a traditional money source such as a bank, investment company or mortgage broker. The lender is pre-approved by the agency. A list of these lenders in your area is available from the FHA or VA.

Choosing the type of home loan best for you may be influenced by the small print in the mortgage note, especially as it addresses penalties that might be imposed. Consider the fact that refinancing a conventional home loan might not carry any penalties. This allows you to do so when a drop in the interest rates lowers the monthly payment, thus making the refinance payment more appealing than your current payment.

It is important to read the fine print in an ARM, FHA or VA home loan note. These loans may incur a prepayment penalty if you make an early pay-off of the principal balance. This may not be an issue to you if you are going from an ARM to one of the fixed rate options. There are few instances where doing the opposite would be a good choice such as the anticipated sale of the property in 1-3 years.

No matter what the future might bring, the present is most important. This means that you consistently make the agreed monthly payments on time without falling behind. You will enjoy many happy years in your home if you treat your home loan with the respect it deserves.