When deciding upon your mortgage, consider two things: how much of a house you want or need, and then how much of a mortgage you can afford. After determining this, you need to think about if you can obtain a mortgage. This directly relates to your credit standing, credit report and income figures. The general rule is that you can typically obtain a mortgage that is two to two-and-a-half times your household income. For example, if your total household income is $50,000/year, you can probably receive a mortgage of between $100,000 and $125,000.

The single most important thing to remember after this is SHOP AROUND (To get a free quote click here). Do not simply take the first offer that you get. The classic mistake consumers make is simply going to the bank that they do business with because they always go there. This may be where you can get the best possible deal but, maybe not. You may also want to consider the services of a mortgage broker. They represent a basket of different lending institutions and, in some cases, have better success than the local bank tailoring a mortgage to fit your needs.If you do decide to work with the local bank, negotiate with the them, similar to the way you do when attempting to lower your credit card's annual percentage rate.

In addition to the annual percentage rate, there are fees in involved. The first fee is paid to the lender or broker for the loan. This fee is known as the points to the loan. Usually, points are linked to the interest rate that you pay. Ask to have the points quoted to you in dollar terms, rather than the number of points, so you know exactly how much you will have to pay. For the most part, home buyers seeking a mortgage who have good credit, will not be required to pay points up front to obtain financing. Be aware of this, do not get pushed into paying points on a mortgage unless you must.

Other fees involved include loan origination (commonly called underwriting) fees and transaction fees, selling, and closing costs. Either the broker or the lender should be able to estimate these fees. The most important thing to remember is that these fees are negotiable. Some of these fees, such as application and appraisal fees, are paid when you apply for the loan. The other fees are paid at closing. If the need arises, you might be able to borrow the money needed for these fees. Should you need this service, your loan amount and your total costs will both increase. Ask what each fee includes because sometimes several items may be lumped into one fee.

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