Types

• Ask about various loan products when shopping for a mortgage. You can opt for a traditional conventional loan, FHA loan or VA loan with a 30-year term, or select a 15-year term to get rid of the mortgage debt in half the time, though your monthly payment will be higher. Decide between a fixed-rate with predictable payments, or an adjustable rate that features a low, fixed rate for the first few years, followed by yearly rate changes. Weigh the pros and cons of an adjustable rate. Rate increases result in payment increases. Adjustable rates benefit borrowers who plan to move before a rate change.
  
  

Size of Payments

• Mortgage lenders recommend keeping home loan payments below 28 percent of your monthly income. Lenders use an equation to tally housing ratio by taking the estimated home loan payment and dividing this number by your monthly income. For example, if you earn $5,100 a month, and your mortgage payment comes to $1,400, your housing ratio is 27 percent, which is within the qualifying range.
  
  

Considerations

• Don't wait until a mortgage lender pulls your credit report and score to assess whether you're able to get a mortgage loan. Know your credit rating beforehand, and if necessary, take steps to pay down debt and improve your payment record. Improvements of this nature can increase your credit score and help you get a mortgage loan.
  
  

Broker Benefits

• Applying for a mortgage loan doesn't require a mortgage broker to find a lender. However, brokers do have contacts with multiple lenders, and this is the easiest way to acquire multiple loan quotes and compare loan products. Brokers can also help you find the lowest interest rate on home loans and provide information on current rates for different mortgages. Inquire about broker fees before using a service.
  
  

Warning

• Be aware of the financial side of looking for a mortgage and buying a home. This is an expensive process, and being financially unprepared can delay the buying process. Down payments for mortgage loans are no less than 3.5 percent, and closing costs (fees paid to a lender or broker for processing the loan) range between 3 and 6 percent of the sale price.