Which mortgage will save you the most money?

Are you looking for a new mortgage? If so, before you start comparing rates and terms, consider how the mortgage suits your individual family, financial, and career situation. Just like choosing a home, deciding on the best mortgage for you depends on many things, including which stage of life you're in.

"Buying a home is not a one-size-fits-all purchase by any means, hence there are a variety of loans," says Alyssa R. Schwabe, content and media coordinator for GSF Mortgage.

So how do you know which mortgage is best for your current stage of life? Keep reading to find out what mortgage experts have to say.

First-time homebuyers

An FHA loan, insured by the Federal Housing Administration (FHA), may be a good option for first time homebuyers, according to Erin Lanz, vice-president of mortgages for Zillow.com.

"First-time homebuyers quite often do not have the significant cash reserves to make a large down payment on a house," says Lanz. This is the main reason that an FHA loan, may be a good route to go." Lanz says that FHA loans require as little as 3.5 percent down.

[Ready to buy a home? Click to compare interest rates and lenders now.]

"Additionally, FHA loans have a lower minimum credit score required to obtain the loan," she says. Typically, you'll need a minimum credit score of 580 for an FHA loan, however, each lender has their own credit requirements that supersede those of the FHA, Lanz explains.

"This means that even if you have a score that meets the FHA requirements, you could still get rejected by a lender who has a higher minimum score requirement," she explains. "Most lenders prefer that you have a credit score of at least 640."

In terms of loan options, the FHA offers both fixed rate mortgages, where the rate stays the same for the life of the loan, and adjustable rate mortgages (ARMs) where the interest rate changes periodically, notes the U.S. Department of Housing and Urban Development website.

So as a first-time homebuyer, which should you opt for? Well, a fixed-rate mortgage is the best option if you have a higher income without any other types of debt, such as car or student loans, or the financial responsibility of children, says Richard Sturm, a financial planner with Seal Beach, California's Sturm Financial.

Younger singles may wish to consider shorter-term mortgages like a 15-year fixed mortgage, instead of a conventional 30-year mortgage, he says. "This option should be considered by young single individuals with low debt-to-income ratios and high current income," says Sturm, adding that they may then quickly pay off their mortgages and purchase additional investment property.

Flippers or homebuyers expecting to move soon

Are you planning to live in your new home for less than five years? If this is the case, Lanz says an adjustable rate mortgage is best for this financial stage.

"With today's interest rates, buyers who intended to live in their homes for less than five years should consider a 5/1 ARM loan," says Lanz. A 5/1 ARM loan's interest rate is fixed for the first five years, and can change (or adjust) once a year after that, according to the Federal Deposit Insurance Corporation's website. Lanz says this is a good option because borrowers will save money for the first five years, as today's ARM rates are lower than the fixed mortgage rates.

[Shopping for a mortgage? Click to compare rates and lenders now.]

The average interest rate for 5/1 ARMs as of June 26, 2014 is 2.98 percent, which is significantly lower than the 30-year fixed interest rate of 4.14 percent, as reported by Freddie Mac. But a 5/1 ARM "resets" after five years and the interest rate can go either up or down, sometimes significantly, depending on interest rates at the time of the reset, says Lanz.

If rates do rise, you may not be able to afford your mortgage payments after five years, says Lanz. "It is best to only consider this loan type if you are certain you will not be owning your home for more than five years," she says. If you stay any longer, she explains, you're susceptible to the two main risks of ARM loans that both eventually lead to paying more than you had expected.

"The first is living in the home longer than you anticipated and dealing with a much higher interest rate and payment after the loan resets," says Lanz. And the second risk?

"[It's] the possibility that you could be stuck in the home unable to refinance due to lack of equity from another housing crisis," she says.

Stay-put homebuyers

A 30-year fixed mortgage is also a good bet for buyers who intend to live in their home for at least five years or more, says Lanz.

"This is the most common loan type, because the principal and interest payments remain stable for the life of the loan," Lanz explains.

Sturm adds, "Tight budgets that many families face today may necessitate a 30-year fixed mortgage in order to keep mortgage payments low."

And since interest rates are likely to rise in the near future, well-qualified young families considering a new home purchase should act quickly, he says. Sturm also suggests a  30-year fixed mortgage for families considering refinancing.

"Mortgages interest rates in 2007 were approximately 6 percent," says Sturm. Interest rates have fallen significantly since then, giving today's families the chance to lower their monthly payments, he says.

Retirees and empty nesters

If your children have left the nest and you're nearing retirement, your income stream has likely changed. This is an especially important factor when it comes to choosing the right mortgage option at this point in your life.

"Many empty nesters live on fixed incomes, which may not keep up with inflation in future years," says Sturm. For this reason, Sturm says these retired individuals should consider mortgages with the lowest monthly payment, such as a 30-year fixed mortgage.

[Shopping for a home loan? Click to compare interest rates and lenders now.]

And what about retirees who've paid down their mortgage and have significant equity in their homes, but worry about making their remaining mortgage payments? A reverse mortgage may be the answer.

A reverse mortgage is not for everyone, but it might be a good option in some cases, says Lanz. For example, homeowners who have significant equity in their home can withdraw cash from their equity and use that money to pay for other expenses, she adds.

Unlike a 30-year fixed mortgage which helps you pay down your principal (the original loan amount), a reverse mortgage increases your principal amount, explains Lanz. So when you sell your home, you pocket less of the purchase price. However, there's an immediate financial benefit from getting a reverse mortgage.

"Reverse mortgages are often seen as a cash cow, because in the simplest terms, [your mortgage] is getting paid by the equity in your home after you have reached the age of 62," she explains.

Lanz says that while most homeowners don't get the equity they built up in their home until they sell it, a reverse mortgage lets you borrow from that unrealized equity until you die, move out of the home, pay it back, or get foreclosed on.

"The major risks for reverse loans all center around the inability to pay it back or the inability to use your home equity once you sell for a major payment such as an illness," says Lanz.

"Homeowners should talk to at least one mortgage professional before getting this type of loan, because there are significant risks involved," says Lanz.

Still undecided?

If you still can't make up your mind about which mortgage to get, consider this advice from Gregory B. Meyer, community relations manager for Meriwest Credit Union in San Francisco, California.

"Based on my many years of experience, there is only one loan I would recommend to anyone - a fixed rate, fixed term mortgage," he says. "Knowing how much your payment is going to be from month to month, year to year, is incredibly helpful in setting long-term spending, retirement, and personal savings goals."

For some homeowners, job change is the norm and periods of unemployment can be expected, according to Meyer. "A fixed payment on their home loan gives them the ability to plan around that payment," he says.

Meyer also warns middle-aged homeowners who may have kids in college to stay away from adjustable-rate mortgages. "An adjustable mortgage can raise heck with your budget planning when you are covering the college expenses of your kids," he says.

And his advice doesn't change for retired homeowners: stay away from ARMs, or you'll run the risk of a rising mortgage payment that isn't met by a rising fixed income, he explains.

"It is not likely that [a] social security or pension will increase to keep up with [the] mortgage," he says. For this reason, Meyer likes the security and predictability of a fixed rate/fixed term mortgage.

"When people get fed up with their adjustable mortgage loan, do you know what they do? They refinance into a fixed rate mortgage loan," he says. "You don't see many people swapping an adjustable rate for another adjustable rate mortgage."