You've found the type of mortgage you want, located a suitable lender, and now you're ready to begin the loan application process.

Unlike many other loans that you may have applied for, this loan process costs money. Lenders levy a loan application fee to cover the costs of running credit reports, filling out mortgage-insurance applications, having appraisals conducted, etc. Some lenders will charge you a flat fee, anywhere from $100 to $400, while others will charge separately for the different services required. These fees are usually non-refundable, although they are typically not due until you close on your loan.

What to expect during this process
If you've ever had a loan before, then providing the requisite personal and financial information should not be a big surprise, although they may want a lot more information this time. After all, you are asking the lender to borrow a lot of money.

Be prepared to provide lots of personal and financial information. You will also need to provide the name and phone number of someone who can verify your financial information -- most likely, your employer's personnel office. If you have substantial non-salary income, you'll be asked to substantiate this through an accountant, stockbroker, trust officer or similar source. If you are self-employed in your own company, you may be asked to submit financial information about the company.

Application forms are usually filled out during an interview or over the phone, with the help of a loan officer, but you could also fill them in at home and return them.

For loans requiring private mortgage insurance (PMI) because you can't put 20% down, check with your lender regarding the necessary documentation.

You may be asked to pay a "loan origination fee" or "prepaid point" -- typically 1% of the loan amount -- when you apply. This is in addition to the application fee. This is money provided to the lender or broker who is securing the loan for you. If this fee is larger than 1% of the loan amount, then it probably includes points (prepaid interest) that you have agreed to pay to receive a lower interest rate. If this is not the case, don't proceed any further until you resolve this issue with the lender.

Check whether the quoted interest rate is guaranteed, and for how long. If you think that interest rates may rise while your application is being processed, ask for a "lock-in."

The federal Real Estate Settlement Procedures Act (RESPA) requires a lender to provide you with a "good faith" estimate of closing costs once you complete a loan application or within three business days. The estimate must include costs for such items as points, an appraisal, title search, title insurance, survey, recording of deeds and mortgages, and attorney's fees. You can ask for a hypothetical calculation of such items as property taxes and hazard insurance, based on your anticipated closing date. Read this document carefully and make sure that you understand and agree with every item on it. Even if the expenses are being included in your loan, so that you don't have to pay them in cash at closing, you still don't want to pay unnecessary expenses.

Time to lock-in a mortgage rate