1. Examine your finances.
If you can afford to buy a home, you must then determine how much mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which can be more than you can afford. It's up to you to take stock of your income and expenses, both current and projected to determine what you can comfortably manage each month. Along with your mortgage payment, don't forget related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.

2. Decide what kind of program is best for you.
The total cost of a mortgage loan consists of the interest rate on the loan, origination fees, discount points and miscellaneous other charges. There are a range of interest rate/point combinations to meet your needs. In general, the higher the interest rate the lower the points. Depending on your circumstances, there is a combination that can best meet your needs. Your lender should explain all of your options to you.

3. Pick a rate.
The first reaction most people have is to pick the lowest rate, but that may not always be the best choice. There are more variables that go into determining the overall cost of a mortgage than just the rate. You also have to consider the source, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and a host of others.

4. Shopping For a Loan.
When you are ready to shop for a loan you have two basic types of mortgage stores to shop -- direct lenders and mortgage brokers. Direct lenders have money to lend. They make the final decision on your application. Brokers are intermediaries who, like you, have many lenders from which to choose. Lenders have a limited number of in-house loans available. Brokers can shop many lenders for each lenders' store of loans. If you have special financing needs and can't find a lender to suit them, an experienced broker may be able to ferret out the loan you need. Mortgage brokers, however, are paid with a slice of the amount you borrow, some more than others some less.

5. Apply For a Loan.
The application process is the easy part -- provided you've gathered documents necessary to prove claims you make on the application. The application will ask for information about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others). The lender will run a credit check on you to take a look at your credit status, but you'll have to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation. If the lender deems you creditworthy, it will likely hire a professional appraisal to make sure the value of the home you are about to buy is truly worth your loan amount.

When home prices rise much faster than rents, it is often taken as a sign of a housing bubble. This map shows the increase in home prices and rents, for 25 cities.

Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage—whether it's a home purchase, a refinancing, or a home equity loan—is a product, just like a car, so the price and terms may be negotiable. You'll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.

Looking backward, it is easy to see how technology has both helped and hindered the mortgage business. The first generation mortgage processing systems could hold large volumes of customer data and distribute the data over a national business model. But these mainframe-based applications relied on inefficient, terminal-based user interfaces and required large, dedicated, and expensive staffs to operate. Heavily customized with legacy development tools, they were costly to maintain and difficult to enhance.

Possibly, less than you think. Many first-time buyers are surprised to learn there is not a set answer to this question. In general though, down payments can range anywhere from three to twenty percent of the home's value.

Mortgages are available with a fixed rate of interest for various terms, ranging from six months to 10 years, with payments amortized over periods of up to 25 years.

This is a type of mortgage with a fixed term and amortization. It does mean, however, that you can make lump sum payments or total repayment at any time without penalty.