Congratulations! You've decided to purchase a home! You are probably now aware that owning a home also means owning a mortgage, since the vast majority of homes are bought with a mortgage loan. Very few of us have hundreds of thousands of dollars stashed away to make an outright cash purchase.

For most of Americans, a home is the biggest financial commitment that they will make in their lives. It will determine their eventual lifestyle, their monetary stability, and their economic well-being.

You've made one serious decision - home-ownership - now it's time to make two more: Which mortgage is right for you, and how to get this loan?

When you borrow money, you are committing yourself to two crucial documents: The Note which is your personal obligation to pay back the loan on a regular basis; and the Mortgage which pledges the home you will be buying as security in case you fail to meet the repayments on a regular basis.

Did you know that the word mortgage literally means "a dead pledge?" Why, you may ask? The pledge is considered "dead" until your failure to repay "revives" it, brings it to life - thus causing it to go into effect. The result being that the home can be taken from you according to the terms and conditions of the mortgage.

The normal meaning for mortgage, however, is financing that you get which is secured by real estate. It used to be that this type of financing was called a mortgage. However, this term is coming to be replaced by the term "trust deed".

Next: MORTGAGE VS. TRUST DEEDS