Mercy and Grace

We are saved because of God’s Mercy and Grace, but what is it about those things that save us? Are there conditions? Can I continue in my sinful lifestyle after I am saved? 
The Grace and Mercy of God can be seen differently yet the same. We cannot have one without the other. God, in His Grace gives us what we do not deserve, while His Mercy through the person of Jesus Christ does not give us what we deserve. We as Christians understand this as we are saved from our sins by His Grace through His Mercy.
So what did I mean by that last statement? Through God’s Grace we are saved… We are saved from the judgement of our sin through God’s Grace. Grace is God’s unmerited favor offered freely "through the redemption that is in Christ Jesus". His Grace is dependent on our faith in Christ so that we may clearly understand that it is not obtainable by any adherence to the law. "For the law was given by Moses, but grace and truth came by Jesus Christ". This does NOT mean we can continue in our sinful lifestyles because Jesus commanded, “Go and sin no more” after saving the adulteress/prostitute from judgement at the hands of the people. She was changed by Grace and saved by His Mercy.
God’s Grace is greater than our sins and covers us if we profess faith and belief in Him. We have to reconcile ourselves to Him. Since we know Him, we are no longer bound by the chains of the law but we still must obey it. The reason for this is two-fold: we must live a Christ-like life following His teachings so that while we are sharing His love and compassion we can bring others to Him so they may be covered by God’s Grace and live. Here is a question for you...If God's Love is unconditional then why are we set up with a condition to receive His Grace??? (We'll get to that soon)
In the same manner, Jesus saves us because He took the punishment of our sins upon Himself so that we can share in God’s inheritance which is eternal life in the Kingdom. Now remember, He did not give us a license to sin. He came to fulfill not abolish the law. By doing this, He removed the need for the sacrifices, the Mosaic punishments (stoning etc.), and the festivals. We are still bound by His Word that we keep the Ten Commandments and morality laws that He lived by (there is one condition). 
Listen to the words Paul wrote in Romans 6:1-4 and 12-14
What shall we say then? Shall we continue in sin that grace may abound? 2 Certainly not! How shall we who died to sin live any longer in it? 3 Or do you not know that as many of us as were baptized into Christ Jesus were baptized into His death? 4 Therefore we were buried with Him through baptism into death that just as Christ was raised from the dead by the glory of the Father, even so we also should walk in newness of life.
12 Therefore do not let sin reign in your mortal body, that you should obey it in its lusts. 13 And do not present your members as instruments of unrighteousness to sin, but present yourselves to God as being alive from the dead, and your members as instruments of righteousness to God. 14 For sin shall not have dominion over you, for you are not under law but under grace.
Without the Law we did not know sin. It is because of the Law that we recognize what is right and good vs. bad and evil. Our nature makes it impossible for us to live a perfect life in the Law. Did you see Romans 6:14? “For sin shall not have dominion over you, for you are not under law but under grace.” God is granting us His Grace, which is not ours to squander but we have so Jesus stepped in to show us how it is done then granted us Mercy as He did what we could not. 
The dilemma is the conditions of the heart. Do we remain faithful and abide by the Law only (which amplifies our sin) or do we accept that Jesus died and listen to the Word, and attempt to walk in the way Jesus did. Do we live in our sin and suffer eternal damnation, or live in Christ through His Mercy and Grace?