Contrary to popular belief, finding a mortgage doesn't begin with an application. 

Education is a better first step. There are dozens of loan types and hundreds of loan programs available through thousands of mortgage brokers, bankers, lenders, finance companies, credit unions, even stock brokerage firms.

Web sites, topical newspaper articles, mortgage books, consumer seminars                                                     and workshops, financial planners, real estate agents, mortgage brokers and lenders are all available to assist you along the way.

Step 1: Review Your Budget
Determine how much mortgage you can afford. Lenders will qualify you for as much as they are willing to lend, which may be more than you may want to spend.

Evaluate your income and expenses, both current and projected to learn what payment you are comfortable with. Include related insurance, taxes, homeowner association dues and any other costs rolled into the mortgage payment.

Step 2: Shop for a Loan
You can get mortgage financing from mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks, commercial banks, credit unions, and insurance companies. A growing number of REALTORS® can also arrange financing. Large real estate corporations own their own mortgage lending subsidiary, some real estate agents are also mortgage brokers and others simply refer clients to affiliate lenders and brokers.

Along with shopping the source, you need to shop loan costs, including the interest rate, broker fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, application fees, credit report fee, appraisal and a host of others.

Step 3: Your Application
To obtain a loan you must complete a loan application and provide supporting documentation. Specific documents include recent pay stubs, rental checks and tax returns for the past three years. During the prequalification procedure, the loan officer will describe the type of paperwork required. Your application will ask about your job tenure, employment stability, income, your assets (property, cars, bank accounts and investments) and your liabilities (auto loans, installment loans, mortgages, credit-card debt, household expenses and others). Having the documents you need for your application beforehand will help the loan approval process go smoothly.

The lender will run a credit report; you'll need to supply additional documentation including paycheck stubs, bank account statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance, and other documentation. If the lender deems you creditworthy, they will issue a loan pre-approval letter. Then all you need to do is find the home you want.