Potentially, it is a matter of owning your dream home. It could be as simple as being approved for a mortgage. Would you run a marathon without preparation and exercise? Similar to training for a marathon, mortgage shopping requires getting in shape. Preparing for home financing goes well beyond, flexing your fingers to fill out loan applications. Regardless of your goal, training is needed to leverage your mortgage power.

Commencing with how the mortgage process works and how your financial situation fits is more important than hoping for the lowest rate, possible. The following steps should streamline your mortgage readiness.

Understand how the loan process works.

Credit scores, payment history, employment, debt and income are the five areas that lenders use to approve loans. Financial institutions utilize ratios to assess your mortgage payment. The front ratio, also known as the housing payment ratio (30%) is used in the calculation. The housing expense compares your total mortgage payment to your monthly income. The total debt expense ratio (back ratio) is 36 percent. This total debt expense, or back ratio, compares your total monthly obligations including your total mortgage payment to your monthly income. Typically, lenders will approve loans that account for 20% to 33% of your gross income.

Tweak your credit.

Your mortgage power is diminished if your credit has not been repaired. According to mortgage brokers, the top mistake people commit during the mortgage process is failure to repair and/or clean up their credit. Prepare for your mortgage six months in advance:

• Obtain copies of your credit report.
• Challenge any errors on your report.
• Review the legitimate factors that are hurting your score.
• Pay off any overdue bills and/or pay down credit card debt.
• Confirm that the modifications have been made on your report before you apply for your loan.

Shop Around.

Just because your credit is pristine, it does not guarantee the lowest rates. Loan shoppers fall into two mortgage traps. Either, they overestimate or underestimate their credit rating. Credit overestimation occurs when a homebuyer is approved for more mortgage than they can afford. Conversely, underestimation of credit happens when unethical mortgage brokers push “sub-prime” loans on borrowers with decent credit. (Sub-prime loans are high interest mortgages designed for people with poor credit. The loans are more profitable for brokers.)

The only way around these borrowing blunders is to know what your take home income can afford even though your credit is good. Additionally, knowing what the prevailing interest rates are for your particular credit standing is imperative.

Obtain loan approval.

Do not misconstrue being "pre-qualified" with being "pre-approved.” Although, they may seem like one in the same, they are different. Generally, pre-qualification is a casual process. It consists of the lender approximating how much money you probably can borrow based on your income, debt and down payment.

In contrast, the pre-approval is a much entailed. It involves actually applying for a loan. Typically, you will have to submit your tax returns, pay stubs and other documentation for approval. Then, the lender will verify the information and check your credit. Next, the lender will agree to make your loan. (Note: real estate agents and home sellers tend to be more negotiable to offers made by buyers who already have financing lined up.)

Dodge paying junk and fluff fees.

The way lenders and mortgage brokers can boost their profitability is by adding a variety of fees. Although, some of the fees associated with processing a loan are legitimate some are fluff fees. For instance, a lender might charge $130 for a credit check when it cost them $20.

Remember to shop around for rates and terms.

Cost compare with lending institutions and mortgage brokers to compare loan fees. Prior to signing the loan documents, challenge any fees that appear to be inflated. Negotiate the fees that seem excessive. If the fees are non-negotiable, take your loan elsewhere. Next, compare the mortgage loan terms.

Set aside extra cash.

On the closing day, potentially you may have to write a check for a number of expenses (attorney’s fees, taxes, title insurance, prepaid homeowners insurance, points and other lenders’ fees). The closing costs and the total can range between 2% to 7% of the selling price of the house.

Proper preparation for closing costs can be quelled by getting a good-faith estimate from your lender early in the loan process. Put the money aside. Three months of reserves for unexpected expenses will leverage your mortgaging power -- with ease.