Q. What is the overall concept of a home loan?

A. Most people don't have enough money to pay cash for a home, so they borrow what they need from a bank or mortgage company.

To ensure that you can afford to pay back a loan, a lender will check your credit history and other personal information, including your income and how much you owe to creditors.

Sometimes a bank or mortgage company will loan you all of the money needed for the purchase. But lenders usually require buyers to cover at least 5% of the purchase price with their own money. That's called a down payment.

The bank will pay the seller for the house and the home buyer will agree to pay the lender back over a period of time -- usually 30 years -- with interest. Interest is money the lender charges for making the loan.

All of the interest that you pay is tax deductible, so you save money on your income tax that way. Also, the taxes that you pay on your property are deductible, saving you even more money at tax time.

Even though home prices are falling right now, the value of a home generally will increase over the years, creating wealth for you. And every month, you will be paying down your debt.

For instance, if you borrowed $100,000 with a 30-year, fixed-rate loan at 6%, you'd be expected to pay $600 every month. With the first payment, $500 of the payment would go toward interest and $100 would go toward repaying your debt.

Each month after that a little more of your total payment would go toward the house each month and a little less would go toward interest until, after 30 years, your debt was totally repaid.

You can get more details about what to expect when you get a mortgage with our guide to finding the best loan. It will take you through seven steps of the mortgage process.

Whether you're buying a home or refinancing an existing mortgage, we have a mortgage calculator that can help you make the right decisions.