First time home buyers often are befuddled when it comes to choosing the best mortgage package. In addition, there is no guarantee of getting your preferred mortgage loan even if you are working with a mortgage professional. Minnesota first time homebuyers must not sign away the loan they qualified for but instead consider a smaller, more affordable loan.

How does this happen? Loan officers will qualify you for a loan based on your income ratio and not necessarily how much you're prepaid to pay in housing payments each month. If you borrow the entire loan amount that you "qualify" for, it's likely that your monthly payment will be pushing your monthly budget to the max.

To prevent yourself from borrowing up to the limit that the loan officer presented, you can set your own loan amount limit. This can help you effectively manage your housing expenses based from your income bracket. There are several ways to find the right mortgage for your newly-purchased home:

1. Consider the tax benefits. Some mortgages are 'interest only' loans which means you can deduct the entire payment on your taxes for that year. However, loans that are designed with a negative amortization scale won't allow you to deduct interest from your monthly payment.

2. Plan intelligently. A fixed interest rate loan is a good choice especially if you intend to stay in your home for 30 years and more. Compared to ARM loans and other loan products, FIR loan can help you withstand changing market conditions, although it may be a higher in interest. A fixed interest loan can also have its disadvantages. The author of 'Smart Consumer's Guide to Home Buying', Barron, suggests that fixed interest loan may increase your loans because of the demands of ecrow account associated with it.

3. Ask about other home payment options. Flexibility in your mortgage loan's payment can help you maximize your funds. For instance, there are mortgage loans that allow making extra payments toward the principal balance without worrying about a penalty. You may inquire about this type of loan so that you would not be problematic of your debts in the future.

4. Look for ways to keep payments low. Even when the lender offers you a large loan, consider cutting back on the loan amount so that you can keep the payments within an affordable range. A low interest rate, long loan term, and the ability to make interest-only payments are a few ways to keep payments as low as possible and within your budget range.

5. Apply for mortgage insurance. Most first time home buyers do not have a lot of money available for the down payment, which can make a big difference to the loan amount and monthly payments. Mortgage insurance can provide for your down payment, or in some cases, allow you to apply for an attractive loan product without having to make any type of down payment.