You can save yourself thousands of dollars over the life of your mortgage if you spend an hour setting up your goals for the type of mortgage you want. Spend some time to consider the kind of loan you need and how long you will keep the property. "?Listen to your inner voice; what does it tell you about the future of interest rates and home appreciation?

Ask your friends and family for referrals to loan officers who took good care of them.

Once you find a few, give each loan officer a call. While the loan officer is prequalifying you for a loan, I recommend that you prequalify the loan officer. This is no time to go without doing your homework and interviewing different loan officers. Trust your gut and go with the loan officer who listens to you. Ask all the questions that you have, be sure you understand their explanations about their recommendations. Don't hold back.

The average loan officer has only been in the business for five years. That means that most of them do not know how to deal with a difficult market like this. A promise of a better rate means nothing if the loan that they recommend to you will cost you more down the road. Going through hell to get the promised rate and then being declined or unhappy with the loan that is presented at closing is no savings at all. Appraisals that you have paid for only to find out later that "?your value is not sufficient to complete your refinance can be maddening.

I talk with so many homeowners who have been placed in terrible adjustable rate mortgages that become monsters at the first adjustment period. Ask what your loan will or will not do. Grill your loan officer with any concerns that you have. If he or she cannot answer your questions, move on to another loan officer.

When you do feel comfortable with a loan officer, move forward to obtaining your credit reports. Always assume that if you give someone your Social Security number and address you have pretty much given them permission to run your credit. Please do not do this casually; it could cost you thousands of dollars. Calculate the difference in interest rates based on a range of credit scores.

All of the big three credit repositories have their own different credit models and usually will come up with slightly different scores. At the present time, the score is the score. No adjustments are made for obvious errors on the report. What you see is what you get. You can, however, preview your credit report and take care of anything that might be pulling down your scores.

In the mortgage business, we look at all three scores and use the middle score as the number that determines what rate you can expect to be offered for a specific loan. Down payment or equity in the property is also considered.

Be aware that the credit report may be pulled an additional two or three times during the course of the loan being processed. If you are working with a broker, that broker will pull their own credit report and the lender that the loan is placed with will pull his or her own report.

If you are using one of the companies advertised on the Internet where your loan scenario is submitted to say, five or more lenders, please be aware that five different lenders will pull five different credit reports. All those inquiries can knock down your credit scores, if only a few points. A few points can mean the difference between 6.25% and 6.5% on the interest rate of your mortgage. It is awful to find out that your score dropped five or ten points because of inquiries. Those with scores below 620 will be especially hard hit by all those inquiries.

If you have had a long escrow, credit reports may also be run at the end of the process. If your scores are between 500 and 680, you will be hit will a drop in your score if there are many credit inquires obtained.' Check out our sister website to calculate the difference in interest rates by various credit scores.

Before you allow any mortgage company to run your credit, be aware that if your report contains any collections you will not be able to negotiate with the collection agency as to paying only part of the balance due. Your report is tagged as a mortgage inquiry and the collection agencies will not budge because they now believe you are house shopping. I do believe that paying off the collection for the entire amount due will reward you with much better rates on all types of credit.

Tell your loan officer if you think you may have collections. Unfortunately, most loan officers are not aware of the problem they can create when running your credit report without first discussing collections and charge-offs.

Paying off any collections is tricky business. If I am suspicious that my client may have any collections, I have them sit at my desk and we use the website for a consumer Free Annual credit report. At the very least, we request those reports by telephone or a letter that I prepare for them. Once the reports are received in the mail, we work on anything that might need fine-tuning or correction.

Delicately handle any collections that pop up on your report. "?If you simply pay them off, you have knocked between 30 to 80 points off your score! Pay them off after your loan has closed.

Even speaking with the collection agency can make the black mark your credit profile "new" again. By the term "new", I mean that the reporting of it now becomes current. All credit scores are based on the most recent two years credit. If you have a five-year-old collection account that you pay off in 2007, you will have made the reporting new again. Even calling the collection agency yourself to discuss your collection will make the reporting new again and tank your credit scores.

You need a qualified loan officer or attorney to speak on your behalf. They may very well be able to negotiate that you pay the debt in exchange for them deleting the account from your credit profile. I typically have my clients sign a credit authorization and I negotiate with the collection agency for them. You can also hire a good attorney for this. A good attorney can save you from paying the inflated balance and pay for themselves in the process.

The goal is to negotiate the payment and get the collection agency to completely remove the item. That way, it never existed and your score just became about thirty to eighty points higher. Press hard to get something in writing for the collection agency prior to sending the payment. Ask that the agreement is faxed to your representative.

Of course you can do this yourself, but the third party help from an attorney or loan officer means that your current address and phone number never make it into the collection agencies' files.

The collection on your report can, though not always, go away after seven years. If the creditor renews it, accept even a penny in payment on it the clock starts again and creates a terrible drag on your score. I don't advise that you use this tactic if you are looking to improve your credit profile.""""""""""""

The next step to preparing for a new mortgage is to gather your income tax returns with the W-2s and your paycheck stubs for the past month. You will need those for all of the borrowers. You will also need bank statements from all of your checking and savings accounts for the past 90 days. Investment statements and any credit card bills and statements for car loans are also a good idea. Write down the name, phone and fax number for your homeowners insurance. This is a simple list of what might be needed on a conventional loan. Additional information may be needed for your personal situation.

I hope that your loan officer will get 90% of what is needed at your initial loan application. It is not uncommon for a lender to ask for additional bank statements and such if your loan process goes on for over 60 days. You can do the actual loan application on the phone, on the lender's website, by mail, or with a visit to your loan officer's office. In complicated cases, it is sometimes wise to make the appointment to meet face to face.

I hope this will give you a good start on getting ready for a new mortgage. A good, experienced, and ethical loan officer will place you in a loan that can ultimately save you thousands of dollars.