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You found your dream home and you can’t wait to move in, but then the butterflies start in your stomach: The dreaded mortgage loan process looms large.

Don’t let bad news about the mortgage crisis discourage you from what has been the most frequent and tried gateway to homeownership for many decades. Very reasonable loan rates are on your side right now, and remember, behind every contract is a human being who, if he or she is a respected and trustworthy professional, has your best interest in mind.

By now you know not to make the mistake of shopping strictly for a low interest rate that sounds too good to be true. Many lenders offer low rates, but stuff their loans with hidden fees to offset the low rate. Remember to read the fine print before signing the contract. Selecting a mortgage lender should be based on his or her track record of quality of service, length of time in business and, of course, how attractive his or her mortgage rates are.

Not all mortgage issuers operate in the same way. You have a choice between three types:

1. A mortgage lender, be it your local bank or a national bank that specializes in mortgage lending.

2. A mortgage broker, who represents different mortgage lenders and shops your loan around for the right fit. Mortgage brokers only originate loans. Once you have closed the deal with the broker, the mortgage contract is sold to another lending institution that collects your payments and escrow deposits, and distributes your property taxes and homeowner’s insurance premiums when they’re due.

3. An online lender, whose headquarters may not be where you live, but it can execute home loans anywhere in the United States.

Pre-qualification

Once you have done your research and found a reputable mortgage broker or lender, you will have to be prequalified or pre-approved for a loan. You may think you can afford a $1,000 payment with your $70,000 annual pay check, but it’s the mortgage broker’s job to look at the purchase price of your home, add up your income and assets on one side and your debts on the other, and run all the numbers to finally tell you if you qualify.

Congratulations if you’re prequalified, but you still have to be pre-approved by the lender. The loan officer asks you for documentation that supports the claims you made on your application. Sometimes, if he feels aspects of your financial disclosures are questionable and may make you a risky customer, a mortgage underwriter has to sign off on the pre-approval.

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Posted 9:38 AM

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