The key to qualifying for a loan is credit. The better your credit, the more likely you are to get the loan you need at the rate you want.

But before homebuyers decide on a home loan, they need to ask themselves what their objectives are going to be, said Rick Monley, vice president/area sales manager of Countrywide Home Loans of Kansas City, Mo.

“There are lots of questions they need to ask themselves,” said Monley, who oversees nine branches of Countrywide Home Loans, including the branch in Lawrence. “How much do you have to put down? What are you trying to accomplish? How long are you going to stay there?”

Once those questions are answered, figuring out which mortgage option to choose should be easier.

Exploring mortgage options

When it comes to picking out a mortgage, the one thing potential homebuyers need to know is that the possibilities go far beyond the traditional 30-year fixed rate loan.

With historically low interest rates, lenders still say the 30-year or 15-year fixed rate loan is a smart choice for some homebuyers, including those planning to stay in their homes for a long time, those who want to use the property as long-term rentals and those who want to lock in low interest rates.

But if someone is looking to own the home for only three to five years, there are other options out there, including adjustable rate mortgages and no-down payment loans.

An adjustable rate mortgage is a good idea for those who buy a house they expect to sell in a few years. Under an adjustable rate mortgage, the homebuyer pays a fixed interest rate for a period of time — three, five or seven years — and then agrees to incur the market rate at the end of that time.

Some loan programs like the 80/20 program do not require buyers to put a down payment on the house. However, if a down payment is required, a buyer might put down between 10 and 20 percent or whatever it takes to qualify, said Monley.

Negotiating a home loan

There are so many different loan options available because lenders created them to be more competitive with other companies, Monley said. So shopping around and being able to negotiate loan terms can end up saving buyers a great deal of time and money.

“You need to save the most amount of money that you can, because keep in mind, if you get a typical mortgage you’re going to pay it for 30 years,” he said. “So if you find one that’s a little bit lower, you may save thousands on a loan. You need to make sure that you have and are comfortable in the best deal out there.”

Two things that home buyers can negotiate are the interest rates and closing costs. Closing costs, which are miscellaneous costs associated with closing a real estate transaction — taxes, real estate agent fees, credit report fees — may be waived or reduced depending on the situation, Monley said.

That is why it is important for buyers to ask lenders for a list of the closing costs and compare it with other lenders, he said.

It is also helpful for buyers to be organized and have certain documents on hand before going to a lender. Buyers should get copies of tax returns and other financial documents to their lender so they can determine how much buyers can borrow.

Potential homebuyers may also want to consider getting pre-approved for a loan, a step that helps buyers know how much they can borrow and gives them an advantage when making an offer for a home.

After doing some homework and comparing different loan programs, a buyer should be prepared to choose the best loan program and to take one more step toward owning a home.