Right now is a buyer’s market in Minnesota, and that’s good news if you’re a first time home-buyer. It means there are lots of homes to choose from, and because there are so many properties on the market, you have a good chance of purchasing a starter home or the home of your dreams at a very reasonable price. First time home-buyers also often qualify for special incentives and perks that can make buying a home even more attractive than renting.

Now even with the incentives, unless you can pay for this new home in full with cash at the time of the sale, a home mortgage will be required. Typically twenty percent of the purchase price is required at the time of the sale, and the rest is borrowed from some type of lending institution. This is why it is so important to act now if you have been thinking of buying; some of the first time home-buyer incentives can significantly lower the down payment required.

Most likely the largest amount money you will ever borrow will be your home mortgage. If you are looking to purchase a ninety to one hundred thousand dollar home, you will probably be looking at getting a mortgage note around seventy or eighty thousand or more. You will make monthly payments to the lender that will be a combination of principal and interest. In the beginning, most of the monthly payment will actually be going towards the interest accumulated on the loan, thereby not actually reducing the principal amount.

Because this is the case, you really need to focus on getting the best possible loan terms with the lowest interest rate. The lower the interest rate, the less it is costing you to borrow this money, and the sooner you will actually be paying off the principal of the loan. You also need to be aware of the different types of loans. A fixed rate mortgage means that the interest rate you are charged is guaranteed to stay the same. One example; you get a fixed rate, thirty year mortgage at the rate of five percent in 2009. You pay five percent interest on that mortgage no matter what the economy does until 2039.

This is better than having an adjustable rate home mortgage because, as the name implies, with an adjustable rate home mortgage, the mortgage rate can be adjusted every year or two and it usually is. So if the interest rates do rise your interest rate will be adjusted higher every year accordingly, your payment will increase, and additional money will be required just to pay the interest portion before anything comes off of the principal amount.

With interest rates as low as they are right now, however, this is an excellent time to get a fixed rate home mortgage and a great way to get a little peace of mind, because you’ll know exactly what your house payments will be every month now and up to 30 years from now (or whatever the term of your mortgage is).