Time Frame

• The time frame that you choose to keep a home loan depends on how fast you want to pay off the mortgage loan and what you can afford monthly. Many home buyers finance their mortgages for 30 years. This time frame reduces the home loan payments to an affordable amount. On the other hand, buyers who want to build equity faster and get rid of the mortgage in less time can choose a mortgage term for 15 years or 20 years.
  
  

Types of Rates

• Interest rates on mortgage loans vary. Borrowers have the option of fixed rates that remain the same for the duration of a finance term. However, fixed rates don't always offer the lowest mortgage rate. Borrowers who want to get the lowest rate possible may choose an adjustable rate mortgage. These loans offer low initial rates for the first three years or five years of a mortgage term, and then reset to a new rate after the initial rate period concludes. Rate adjustments can trigger an increase or decrease in mortgage rates, depending on the current market. Adjustable rates benefit buyers who plan on moving before their scheduled rate change, whereas fixed rates benefit buyers who intend on living in the home for many years.
  
  

Impact of Credit

• Credit scores impact mortgage financing, and if your score doesn't meet a lender's minimum requirements, you can't get a mortgage loan. Lenders vary in their requirements for credit scores. However, maintaining a score in the 680 range or higher makes you a good candidate for a mortgage loan. Payment history is a major credit score booster. This single factor makes up 35 percent of your credit score. Never miss a credit card or loan payment.
  
  

Debt and Affordability

• What you can afford to spend financing a mortgage loan depends largely on your existing debts and present income. Mortgage lenders consider two factors when assessing affordability. On one hand, the mortgage payment on your new loan cannot exceed 28 percent of your gross monthly income, says the Home Loan Learning Center. On the other hand, your complete debt load--which refers to all your minimum debt payments--cannot exceed 36 percent of your gross monthly income. Owing large balances on credit cards or spending a huge percentage of your income on car payments and other loans can affect mortgage affordability. Pay down debts first, and then apply for mortgage financing.