Fixed vs. Adjustable Rate Mortgages. If this will be your first home or a "transitional home" -- one you plan to own for a short time, an ARM may be the best type of loan. If it's going to be your dream home or one you plan to raise a family in, then you may want the stability of a fixed rate mortgage. If you choose an ARM, the index should be based on the Cost of Funds Index if rates are increasing, and Treasury Bills if they are decreasing. The COFI's are less volatile over time than T-Bills; make sure the teaser rate is understood and what the real rate would be. Whichever loan you choose, make sure that you scrutinize all the closing costs. If you are required to have a mortgage escrow account and private mortgage insurance, make sure you understand the terms and cancellation procedures (AHA has publications to assist you). Also, make sure there are no prepayment penalties so that you can utilize an accelerated mortgage plan. A good mortgage reduction plan can save you tens of thousands in interest costs, and shorten your loan term, with only small extra principal payments. For example, you can can cut 11 years and over $100,000 of interest payments off a typical $150,000 30-year mortgage. If you experience negative changes in your job, health, or marital status, you can revert to the standard payments in your mortgage contract.

Get A Quality Home Inspection. Although it is hard to believe, more people pay for inspections before buying used cars than when making the biggest investment of their lives -- their homes. Paying for a qualified home inspection before you buy a home isn't just spending "a little extra" for peace of mind; it's absolutely essential for anyone who doesn't want to spend thousands of dollars for repairs.

Pay off debts. Especially small credit cards. Lenders look at the minimum monthly payments of each credit card. When you have several small credit cards, the minimum payments could add up. It is best to pay these off and any other monthly loans that you can afford.

Get your documents together. While you may not need all of your documents right away, it is best to know what will be needed in the future. Click Here to see a list of the documents that could be needed.

Remember your closing costs. In addition to your downpayment, you will also have some closing costs to consider. It is best to consult your lender and lawyer to get a more accurate cost