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A mortgage is a type of loan that allows you to buy or refinance a home. In exchange for a mortgage, you agree to pay back the money that you borrow, along with interest, over a fixed period of time.

There are many types of mortgages, including government-backed loans and conventional loans. They come with different fees and interest rates, so it’s important to shop around for the best deal.

Buying a house is one of the biggest, most expensive and longest-term transactions you’ll ever make. So it’s important to understand all aspects of the mortgage process, from what you can expect as a borrower to how your mortgage works and what happens when you get behind on payments.

Your mortgage payment is made up of a combination of four components: principal, interest, taxes and insurance. Each component is part of your overall monthly payment, and the more you know about them, the better prepared you’ll be to manage your finances and budget in the future.

The most common mortgages are 30-year, fixed-rate loans. These offer the best rate of interest and are generally a good option for first-time buyers because they’re less risky.

Before you even start shopping for a home, you’ll need to be pre-approved for a mortgage by a lender. This means they’ll take a close look at your credit and finances, and then tell you how much you can borrow. You should get a preapproval as soon as you’re serious about buying, since lenders often won’t accept offers from buyers who haven’t been pre-approved.

When you’re ready to apply for a mortgage, you’ll need to submit an application and provide a variety of documents to verify your income, employment, assets and other details. The sooner you respond with these documents, the faster the mortgage process will go.

A debt-to-income ratio (DTI) is a key factor in your loan approval and will influence how much of your monthly income goes toward paying down debt. A high DTI can result in a higher interest rate and lower loan amounts, so be sure to keep your DTI within a reasonable range while applying for a mortgage.

Down payments are another way to reduce your interest rate and monthly payment, as well as save you money in the long run. Typically, lenders require a down payment of 20% or more, but some loan programs are available that allow you to put as little as 5% down.

Putting down a significant amount of cash can help you avoid paying private mortgage insurance, which is a costly extra monthly expense on most mortgages with less than 20% down. The more money you put down, the smaller your mortgage will be and the more likely you’ll be to find a mortgage that meets your budget.

Once you have your down payment, apply for a mortgage online or with your local lender. You’ll be asked to provide some documents, such as a tax return and financial statements.

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