A mortgage represents a loan or lien on a property/house that has to be paid over a specified period of time. Think of it as your personal guarantee that you'll repay the money you've borrowed to buy your home. Mortgages come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture.

The month-by-month allocation of your monthly payment to the loan's interest and principal is called an amortization schedule. With most loans you pay off the interest on the loan before you pay off the principal (or the actual amount you borrowed). Your lender will provide an amortization schedule to show you how the percentage of your principal paid off increases with every payment, while the percentage of interest decreases

Once you decide on the mortgage you want, do your homework. Different lenders offer different rates, points, and fees. Ask around and compare.

Understanding the benefits of different mortgage offerings can be a complex process. How do you figure it all out?

Fixed-rate mortgages are the most common mortgage for many homebuyers because the monthly payments are stable. The interest rate you lock-in will be the same interest rate you pay for the life of the loan - whether it's a 15 or 30 year.

What are the benefits of a fixed-rate mortgage?

• Inflation protection.
  If interest rates increase, your mortgage and your mortgage payment won't be significantly affected. Even if your taxes or insurance costs go up over time, your basic loan payment (principal and interest) will stay the same. This is especially helpful if you plan to own your home for five or more years.
  
• Long-term planning.
  You know what your monthly housing expense will be for the entire term of your mortgage. This can help you plan for other expenses and set long-term financial goals for yourself and your family.
  
• Low risk.
  

You always know what your payment will be, regardless of what current interest rates are. This is why fixed-rate mortgages are so popular with first-time buyers.

Click here to learn more about mortgage rates in your state: Mortgage Rates