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• How long do I plan to live in this house?
• Where do I see myself in five or ten years?
• Do I have to or want to make home improvements?
• Do I want to keep cash on hand for other investments?
• Can I take financial risks?
• Do I want to be debt-free?

Now that you have a reasonable picture of your financial philosophy, shop around and evaluate your options. Don't rush into the first loan offer you get.

If you can afford to take financial risks and have the assets and credit score to back it up, you can get the best deals. Go for mortgage products that allow you to pay the least amount of cash while still satisfying your loan obligation. Consider these:

1. Choose a longer loan term, such as 30 years or more. The longer your amortization period, the lower your monthly payments would be, but the more interest you'd pay. If you borrow $100,000 at 8 percent interest over 30 years, you would pay $164,000 in interest along with the principal by the end of the term. Your mortgage payment would be $733 a month. A 15-year mortgage, in contrast, would require a $955 monthly payment.

2. Skip the down payment and go for an "80-20" loan. A standard loan funds the first 80 percent and a second loan with higher interest rates finances a 20 percent down payment. This option also gets rid of private mortgage insurance, or PMI, which is typically required for homes bought without 20 percent down payments. PMI protects the lender in the event that a borrower defaults on a loan.

3. Consider an adjustable rate mortgage (ARM) if you want to keep some cash or take advantage of a low interest rate. The rate is fixed for the first few years, then begins floating. But be aware of market conditions - if rates rise, so do your payments. This option makes sense for serial relocators, who don't plan to be in a home for more than five years. A three or five-year ARM lets you make low payments and gets you through the typical mortgage cycle. If rates drop, you can refinance. If rates rise, you can sell. The number of times the rate is adjusted and the period between adjustments vary.

NEXT: Other loans to consider if you can take risks >>