A mortgage is a loan secured by real property, commonly used to buy a home. U.S. options include conventional loans and programs with particular eligibility rules. Fixed and adjustable interest structures are another separate choice.

How the borrowing arrangement works

Start with the full housing budget, including taxes, insurance and other ownership costs. Compare loan estimates for the same scenario and ask which terms can change. An initial prequalification is not the same as a final closing commitment.

Costs and repayment

Review the interest rate, APR, closing costs, loan term and any mortgage-insurance requirement. For an adjustable-rate loan, understand when and how payments can change. Compare the amount needed at closing as well as future monthly costs.

Preparing to compare offers

• Prepare income and asset records, existing debts, the intended down payment and property information.
• Ask which program requirements apply and whether the rate is locked, until when and under what conditions.
• Review closing costs, reserves and funds needed after closing instead of using every available dollar for the down payment.

Questions worth asking

• Which loan programs am I eligible for?
• What is included in the monthly payment?
• Which closing costs and rate terms can change?

Paying points needs a time-horizon comparison

Ask for matching quotes with and without discount points. Divide the added upfront cost by the monthly saving for a simple break-even estimate, then consider whether you expect to keep the loan that long. This estimate omits investment returns and other differences.

Are FHA, VA and USDA loans interchangeable?

No. They are different programs with their own requirements. Check official program and lender information.

Does a preapproval guarantee closing?

No. Final verification, property review and other conditions may still apply.

BorrowCompass provides a guide to this topic at first time home buyer loans. Review current provider terms before making a borrowing decision. BorrowCompass does not issue loans or guarantee approval.