The economy is tightening, the real estate market is sagging and the federal government is cutting rates to try and stimulate borrowing. If you are going to take the plunge of buying a home at this time then here are some thoughts.

1. Avoid stretching yourself. Only borrow what you can pay with 25% of one income.

2. Keep it short and simple. Choose the shortest terms that the lender offers (usually 15 years) and lock in your interest for the full 15 years.

3. Save for one year before you buy. Put back the payment that you would be making (or more) each month and use that to pay on the purchase.

4. Avoid borrowing more than the house is worth. Even 100% financing can often be a fatal financial decision.

5. Plan to pay off early. Set up your finances so that you will have enough to pay extra on the mortgage and still continue to put back money into savings. Paying off a mortgage early will save you thousands of dollars over the course of a loan.

These five tips will help you borrow wisely and avoid the financial pitfalls that are affecting so many people today.