Photo: Jim

With the American economy recovering and the housing market rebounding, many Americans have begun to consider if they should purchase a new home. Here are five critical steps every individual should take as they move toward obtaining a mortgage to buy a home.

1. Understand what you can afford
As with any major financial decision, the first step in the process should be a careful review of what is within the range of affordability. Buying a home can be a financial maneuver that makes a ton of financial and personal sense and can be better than renting. Yet taking the time to assess one's personal financial situation is critical before the process starts.

Source: Flickr / Images of Money.

Remember, a mortgage payment also does not involve simply what is paid to the bank, but also property taxes and insurance.

Plus, the homeowner is responsible for any maintenance expenses and utilities. Once all of those are factored together and affordability is gauged, be sure to evaluate personal savings to ensure a dramatic shift in personal finances -- through a job loss or something else -- wouldn't result in disastrous consequences.

Buying a home can be a wonderful step an individual or a family makes, but as with any financial decision, it should also be approached with care and consideration of both the seen and possibly unseen costs.

Source: Flickr / 401(K) 2013.

2. Do your research
After careful consideration of one's personal financial situation, take the time to understand and research the various types of loan options that are available. Whether it be a 15- or 30-year mortgage, one with a fixed or adjustable rate, upfront or delayed fees, possible points, or even something like private mortgage insurance, there are a variety of things that aren't in everyday language associated with mortgages that should be known by borrowers.

Yet it shouldn't simply be a matter of finding what those things are, but ultimately the costs and benefits.

For example, today's rates on a $200,000 mortgage could result in the monthly payment on a 15-year mortgage being roughly $400 higher than a 30-year. However, it would result in more than $100,000 in interest savings over the life of the loan. Understanding which would be better is an individual decision, but one that must be considered.

3. Shop around
Mortgages are often the biggest singular financial decision people make, but all too often people will walk into their local bank branch and walk out with a mortgage without ever shopping around to find the best deal out there. Take the time to sit down with multiple lenders, whether they are giant banks or local credit unions, to have a variety of different options.

Also be open about your shopping around, as it may incentivize the broker or lender to provide you with a better rate to ensure you have the best deal and will ultimately chose them. Look around for different options, and don't be afraid to negotiate.

Source: Flickr / Images of Money.

4. Evaluate the true cost
On the surface, one loan may appear to be the most appealing, but without careful consideration of the final cost of each, it may not be the best option.

For example, you could be offered a lower rate by one lender, but they could charge more fees, resulting in a higher cost. Or perhaps, one may allow you to pay upfront points to reduce the mortgage rate, and while it may cost more up front, it could ultimately make the most financial sense over the long term.

With all the deals in hand, compare them side by side to get a true picture of what makes the most financial sense, and go ahead choosing that one.

5. Don't be afraid to ask for help
Mortgages can seem complex and daunting, and at the same time, are a monumental commitment. Seek out trusted advisors, lawyers, or friends who can readily answer any questions or concerns you may have. Ensure they don't care one way or the next where the mortgage is from, and are looking out in your best interest. That will provide a sense of relief and clarity as the final decision is ultimately made.

Owning a home can be a great thing, and as with any financial decision, you can make the right decision on what mortgage to pursue with a little hard work and careful consideration.