Most mortgages are standardized so the lender can sell them to the secondary market (Fannie Mae and Freddie Mac are the best known). 'Conforming loans' are cookie-cutter loans that banks can count on selling to the secondary market to get cash back to make more loans. If you have a straightforward situation - standard job, reliable income, sufficient down payment, and good credit report - you are probably a good candidate for a conforming loan.
However, if you are taming credit problems, are self-employed, a small business owner, have had an erratic work history, or present any other complication to the process, the lender will probably have to customize a deal for you. You will have to meet more stringent requirements as the bank determines if it wants to tailor a loan for you circumstances.
Increase your chances of getting a non-conforming loan by:
• Choosing a smaller bank that is known for customer service.
• Setting up an account several months in advance with a substantial amount of money.
• Establishing a personal relationship with that bank.
• Lining up character witnesses who can vouch for your creditworthiness.
• Coming up with additional collateral for your loan.
Both 30 and 15-year loans are standard. Because there is no penalty to paying off a loan early, you can get lower monthly payments with a 30-year loan but pay it off on a 15-year schedule, getting the best of both worlds.
Adjustable-rate mortgage start out with a set, lower interest rate. Then, after a certain number of years (usually 3, 5 or 7), the rate suddenly adjusts to a rate tied to an indicator specified in the original mortgage. If you are quite sure you will be moving before the rate is set to adjust, an ARM can be a good option. However, you should take out a loan based on the maximum payment you might have to make, not the minimum payment. Otherwise, you might get caught without enough income to pay your mortgage.
Very large mortgages are called "jumbos". Jumbos are bigger than the maximum allowed for conforming loans. They almost always command higher rates and have customized terms. To avoid the hassles and expense of a jumbo mortgage, increase your down payment to get the mortgage into conforming territory.
Finally, you might be able to negotiate financing directly with the seller. Seller financing can take several forms. The seller might act like a bank and you would pay a set monthly amount, just like a regular mortgage. You might 'rent to own' by renting the house, with the rent payments set aside in escrow until you decide to buy the house, when the accumulated rent becomes your down payment. Or you might explore additional owner financing options. Always work closely with an experienced real estate attorney on seller financing deals.