• What is the maximum monthly payment I can qualify for?
• What are discount points?
• What is an APR?
• Should I finance my home for 15 or 30 years??
• What does my monthly mortgage payment consist of?
• When should I lock in my interest rate?
• Once I apply, how long will it take before I receive an approval?
• How much money will I need at closing?

Most of the mortgage lenders, qualifies you as a prospective borrower by looking at your income and debts. For conventional loans, standard industry debt-to-income ratios are 28/36. This means that up to 28% of your gross monthly income may be used for the payment of your mortgage, or up to 36% of your gross monthly income may be used for your total monthly debts (i.e., credit cards, car loan payments), including the amount of your new mortgage payment.

Discount points are a percentage of the loan amount that you can pay to reduce your interest rate. One "point" equals 1% of the loan amount. If you're going to be in your home for a relatively short period, it may not be worth it to you to pay discount points to reduce your rate. If you would like to lower your monthly payment by lowering your interest rate, then paying points up front may be the best way to do this. Calculate your break-even point by subtracting the difference between the payments of a no-point loan and a specific discount-point loan. Then divide the extra cost of the discount points by the monthly savings amount. This is the number of months it will take to recoup your costs and start saving monthly with the reduced rate.

APR stands for "annual percentage rate" and reflects the interest rate charged on the loan plus prepaid finance charges, such as the points and financing costs you pay in obtaining the loan. Other lenders may quote a low interest rate, but often charge miscellaneous fees in addition to origination and closing fees. You'll want to look closely at the APR to see how much you're really paying for your loan and find about any pre-paid fees up front.

Usually, within three to five business days of application, your mortgage lendor will issue you a good faith estimate, estimating your closing costs, and a truth-in-lending statement, disclosing your APR and explaining precisely how much your loan will cost you with all related fees and charges.

Mortgages are generally paid over either a 15- or a 30-year period, although terms for fewer years are available as well. While monthly payments for a 30-year mortgage are naturally lower than those for a 15-year mortgage, a 15-year mortgage could save you a considerable amount of money in the end.

Suppose you have a loan for a $100,000 home at an interest rate of 8%. On a 30-year loan, your payments would be $734 a month.*

For the same $100,000 loan with a 15-year mortgage, monthly payments would be $956 a month.* If the additional $220 a month is within your means, you could save $88,269 in interest over the life of the loan. Plus you'll end up owning your home in half the time. You should also note that 15-year mortgages can usually be obtained at an interest rate lower than comparable 30-year mortgages.

*Payment includes principal and interest only.

Your monthly mortgage payment consists of a payment on the principal of your loan, the interest payment and your escrow payment (monthly payments collected to pay for your hazard insurance and property taxes.) This is commonly referred to as P.I.T.I. (principal, interest, taxes and insurance.)

To be an informed buyer, you'll want to be aware of what interest rates are doing. Have they been falling or rising? Depending on the market, you may want to wait before locking in an interest rate, or you may want to lock in as soon as possible.

Some mortgage lendors, would like to give their customers a second chance to get the best interest rate available. That means, first you lock-in your interest rate at the time of application and then they will give you a chance to lower it before closing! If your application is approved, and interest rates drop before your closing, you'll have the option to choose the lower interest rate.

Depends on your bank/mortgage lendor. If you meet certain criteria, you can receive a loan decision right over the phone when you apply. Otherwise, it may take 2 to 5 business days for your loan decision. Some programs, however, may require additional documentation and verification, so approval may require a longer timeframe. Check with your bank/mortgage lendor for an estimate of the time that it will take to receive your approval. Once approved, you may receive a commitment letter, which will inform you of any additional documentation needed at closing.

Your closing costs will depend upon the amount of your down payment as well as the various fees charged to finalize the purchase of your home. Generally, conventional loans require a minimum of 5% to 10% of the sales price in down payment. FHA loans require at least 3% to 5% down, while VA loans can often be financed for 0% down. Closing cost fees will include such items as mortgage insurance, prepaid taxes, attorney's fees, title insurance, etc.

Usually, shortly after you apply for a loan, your bank/mortgage lendor will provide you with a Good Faith Estimate of all closing costs.