When it comes to purchasing a home or refinancing your existing mortgage, determining what mortgage is best for you can be a difficult choice. There are a number of different factors you should take into consideration when obtaining a mortgage.

The most common mortgage program for home buyers, especially first time home buyers, is a 30 year fixed program through the FHA. FHA home buyer loans generally allow for the lowest down payment and lower interest rates than a conforming home buyer loan.

However, a 30 year FHA mortgage may not be the best option for you. Even though the FHA requires a minimum of 5 year of Private Mortgage Insurance, no matter the loan to value, there are other questions you need to ask yourself.

The first and foremost is, can I put 20 percent down to avoid Private Mortgage Insurance on a conforming loan? If the answer is yes, the next question you should ask yourself is, how long will I be in this home?

If you plan to stay in the home for only 5 years, a 5 year adjustable rate mortgage may be best for you. Additionally, if you want to pay the home off sooner and pay less interest over the life of the loan, take a look at a 15 year fixed mortgage. If your Debt to Income ratios are low enough to qualify for a 15 year mortgage you will be able to obtain a lower interest rate and save thousands of dollars in interest when compared to a 30 year.

The same rules generally apply to refinancing your current mortgage. With home values underwater, the Home Affordable Refinance Program 2.0 has opened up a ton more options for upside down homeowners.

I have personally seen borrowers take advantage of the HARP 2.0 program and save over $200,000 in interest by switching their 30 year mortgage into a lower interest rate on a 15 year mortgage. However, with the HARP 2.0 program your options are limited to fixed mortgage rates only.

If you are lucky enough to have equity in your home, now may be a good time to take advantage of an adjustable rate mortgage if it fits into your financial goals. An adjustable rate mortgage has a lower interest rate than that of a 30 year fixed, but you have to keep your eyes on the market.

An adjustable rate mortgage is tied to either the London Inter Bank Offering Rate (LIBOR) or the U.S. Treasury Bill. With the world economy in shambles it appears we will be seeing historic low mortgage rates for some time, but when the tide turns you should consider getting back into a fixed rate mortgage.

As a licensed mortgage broker in Minnesota I take pride in helping all of my borrowers understand the differences in mortgage products to help determine which financing option is best for them. If you live in Minnesota and are considering purchasing a home or refinancing your existing home, be sure to check out mortgage rates in Minnesota to make sure you are getting a competitive rate.