The first step when looking for a mortgage is checking your credit report. There are three agencies that can give you your credit report free, once a year. This way you know exactly what is on your report and how to deal with it. You can also dispute incorrect reports before approaching lenders.



If you find unfavorable information on your credit report, don't worry just yet. If previous credit problems have a specific cause such as a medical crisis, explain this to lenders you approach. The institution may not hold it against you when determining the terms of your mortgage. If the problems are due to poor credit management, you are likely to be quoted higher rates. Before accepting these rates, ask lenders their specific reasons for your quote and as what steps can be taken to improve the terms. Most loan professionals want to help you fix your credit so that you can eventually qualify.

Once you've figured out your credit situation, it's time to shop. Check with banks, mortgage companies, credit unions, and thrift institutions. You can also use a broker to check out several options and present them to you. Brokers have the ability to shop rates for you and have access to hundreds of loan options. Often they can find rates as good as or sometimes even better than going directly to a bank. Brokers also offer more creative financing for people with complicated situations (former bankruptcies, collections, etc.)

Once you get quotes, be sure to compare all the terms involved, including rates, points, fees, down payments and any other costs. The loan originator is required to give this to you in the form of a “good faith estimate.”

If you need help, there are calculators available online to determine how much you'll pay in the long run. The best way to get a good deal is to use the fact that you're looking for the best rate and loan program for your specific needs.

It has become easier and easier to qualify for a home loan. In many cases, buyers can come in with absolutely no money down, even if they have dings on their credit report. Gone are the days when home owners have to save for a down payment. Interest rates will be lower with a down payment, but 100% financing is the easiest way to get into your first home and take advantage of the IRS tax benefits of home ownership.

While it may take time and effort, you should be able to find a good mortgage offer to buy your new home. Ask your neighbors, friends, and colleagues who they used for their mortgage. Great referrals are the best way to find a mortgage professional you can trust.