Also, make sure to include all the income you have. If you have any equity in any stocks or other financial accounts, make sure to mention that to the broker as well.

The more money you can put down on the loan, the more likely it is that you can get approved. FHA loans usually only require 3-5% down. They are also usually open to working with people with credit problems.

Know your terms - Like all industries mortgage lending has its own vocabulary. Familiarize yourself with the terms. Know what a point is, what the current interest rates are. You don't have to be an expert but you don't want to walk into a mortgage office without any knowledge whatsoever.

Know your credit score - Find out what your credit report and credit score say about you. Understand the basic reasons behind your credit score. Research how credit can affect the types of mortgages available to you.

Prepare questions - Make a list of questions. You will want to know the types of mortgages the lender offers, the interest rates, the closing costs and the points. Ask about prepayment penalties and additional fees. Have the lenders give you their answers in writing.

Sit down and compare - Go over each proposal line by line. Make sure you are comparing the same types of mortgages. Don't compare an adjustable rate mortgage to a fixed rate mortgage. Don't compare the lump sums of the closing costs. Analyze the individual items you are paying for in the closing costs. Know the penalties each lender may assess if you pay your loan off early.

Think long term - A mortgage that has a lower interest rate may not always be the better mortgage. Be sure there are no escalating rates, balloon payments or exorbitant penalties on the lower interest rate mortgage.

Ask questions - If there is anything at all you don't understand, ask. A mortgage is probably the largest and most important debt you will ever undertake.

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The average rate of interest on mortgage loans continues to fall and has been under 5 percent for almost all of this past year, with this recent round of rate cuts seen as the lowest for borrowers in years. The reason, many borrowers today have bad or at least less than perfect credit scores. Still a borrower with less then perfect credit an jump through a few hoops and get a fairly decen rate on a loan.