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Financing Your Home

     Perhaps the most important aspect of buying a home is applying for a mortgage, hence financing. A mortgage is defined as; a legal document between a lender and borrower stipulating the terms of repayment for a specific property; it essentially becomes a lien on the house.

     The amount of money you will be able to borrow for your home will depend on your income, interest rates, amount of down payment and length of loan repayment. By calculating you monthly costs (see Determining Your Budget) you will know how much you will be able to afford prior to applying for a mortgage.

     It is possible to get pre-approved for a mortgage, so that you may gear your home search according to your pre-approved loan amount.

     Your mortgage payments are a culmination of the entire amount borrowed, applicable interest, and in some cases, property tax. Your main goal when applying for a mortgage is to get the lowest interest rate possible on your loan. There are many ways to lower you mortgage interest rates, including; putting as much of a down payment as is possible, shortening the amount of time to repay the loan (amortization period), paying on a weekly or bi-weekly schedule, as well as applying lump sum additional payments. The terms of payment applied to your mortgage can usually be changed on an annual basis, though again, this depends on whom you borrow from.