Some Buyer's think the mortgage process is the most painful and frustrating part of the entire transaction. The fact is it can be unless you are prepared in the beginning.

The mortgage process is designed to convince a lender that you have the means to comply with the terms set out in the mortgage to replay the debt. The areas of consideration in this process include your credit history, your work and income history. Mortgage lenders generally base their decisions on a debt to income ratio. The ratio is simple to figure: Take your total monthly income and divide that by your total debt (credit cards, installment loans, car payments, child support, etc.). Different lenders use different qualifying ratios, so it is best to choose a lender and begin the process.

It is important in this economy that you be (at the very minimum) pre-qualified for a mortgage loan before you begin your home search. Shortly after that time, you should complete the process and become pre-approved for your mortgage loan. This pre-approval could well mean the difference between your purchase offer being accepted or rejected when presented to a Seller with multiple offers.

Here are items you should have with you when you apply for a mortgage loan: Two years or residence history, two years of employment history, Social Security Number, VA Certificate of Eligibility (if applicable), two years of Tax Returns or P&L if self-employed, your most recent three months bank statements, monthly debt information, last years W2 form, credit card numbers, divorce decree, current pay stubs, drivers license.

The language of mortgages is foreign to many homebuyers, but becoming knowledgeable makes you a better consumer. Here are some basic terms for your convenience.

Adjustable Rate Mortgage (ARM): Loans where interest rates go up or down, usually annually. Advantages: Initial rate generally lower than on a fixed rate mortgage; limits on how much a rate can go up at one time; buyers can qualify for larger loan amounts. Good for buyers whose income should grow and who plan to move in a few years.

Appraisal: When financial institutions, insurance companies and government assessors all do, separately, to determine a home's loan value. Buyers usually pay for their lender's appraisal.

Balloon Loan: Short term, typically 5 or 7-year loans with manageable monthly payments, but a large "balloon" payment at the end of the loan term. Good for buyer's planning to move "early". Can be refinanced.

Closing costs: The down payment, fees and taxes paid when a property is officially sold. With a minimum down payment, buyer costs are usually around 6 to 10 percent, depending on the loan type and amount.

Conventional mortgage: "Non-government" mortgages that require high down payments (typically 5% of the sales price) and allow less current personal debt. Either ARM or fixed rate.

FHA Mortgage: Government sponsored ARM or fixed rate mortgages that require as little as 1% down payment. More lenient with customer debt and credit problems; allows the use of gift funds for down payment. Similar VA mortgages are limited to Veterans.

Fixed Rate Mortgage: Loan interest never changes. Advantage; no change in principal/interest payment. Good for buyers whose income will remain steady, who plan to stay more than three years or who expect interest rates to rise. Shorter-term mortgages of 10 or 20 years often have lower rates and significant overall savings that a 30-year mortgage.

Point: One percent of the loan's value. Points can be paid up front by the buyer's to lower interest rate on a loan. Paying points can save money in the long run, but buyers should calculate to be sure.

Private Mortgage Insurance (PMI, MIP): Paid monthly by Buyer to protect lender against Buyer's default. Can be removed after 20% of a home's value has been reached. New rules require lenders to notify people when PMI is no longer required.