Choose mortgage loans carefully

There are more than 32,000 homes for sale in the Los Angeles metropolitan area today and many analysts believe that the housing market is entering a buyers' phase. This presents a great opportunity for those thinking of buying home.

But the variety of home mortgages available today can easily overwhelm a first-time buyer or even the most experienced homeowner. It is important for borrowers to be well informed about their options and to take the time to find the best mortgage for their needs and budget.The right mortgage can be a valuable tool to establish credit and manage personal finances.

Decades ago, most lenders offered 30-year, fixed rate mortgages and few other loan options. Today, a "one size fits all" approach to home loans is not in consumers' best interests.Loans can now be matched to individual needs, unique financial situations, stages of life and personal financial goals.

Finding the right loan Borrowers need to consider their unique financial situations and look for a mortgage that best fits their needs. For example, how long you intend to stay in your home is a major factor when considering a mortgage.

A newlywed couple in Los Angeles might decide to purchase a small home or condo with the idea of staying in the dwelling for only a few years, then moving to a larger home to start a family. In this instance, an adjustable rate loan with a lower interest rate in the short term might be the preferable option over a traditional 30-year, fixed interest loan.

Another important factor is the risk of increased monthly payments depending on the loan you choose. Borrowers should decide if it is best to make the same mortgage payment every month or have the option of lower rates in the short term, while budgeting for possibly higher interest rates and higher mortgage payments down the road.

Sometimes a combination of both works best. Some adjustable rate loans allow borrowers to select an initial period during which interest rates remain low and fixed for a period of time, and then fluctuate like a traditional adjustable rate loan.It is wise for borrowers to un

derstand the built-in protections called interest rate caps that limit the extent to which a loan may adjust. Borrowers and lenders should also consider family income, monthly expenses and current savings. A professional, two income couple planning a family has a very different set of loan needs than a retired home buyer who is living on a fixed income. The retiree might prefer the security of fixed or "locked down" payments each month while the professional couple might want a home loan that offers a lower monthly payment during their family's early years.

Regardless of your financial circumstances, avoid lenders who simply want to sell you a loan off the shelf.Look instead for a lender who can analyze your present financial situation, determine your specific needs and help you choose a loan that allows you to buy the home of your dreams and manage your money.

Borrowers must understand that in today's loan environment, knowledge is power.

Martin is an executive vice president with Countrywide Financial Corporation.