With the continuation of historically low interest rates, there are record numbers of homebuyers in the market place right now. Low rates have also sparked the interest of many homeowners who are considering refinancing their current loan. As a result, there are a large number of people out there who have questions regarding mortgage options.

Shopping for a mortgage can be somewhat daunting if you’re not adequately prepared. There are literally dozens of loan types, hundreds of loan programs and thousands of mortgage brokers, bankers, lenders, credit unions and finance companies willing to sell you a mortgage. Education should be your first step to selecting a mortgage.

There are numerous mortgage information sources available, such as Web sites, books and newspapers — these will help you understand the terminology and pertinent details once you’re in conversation with a lender. It’s also in your best interest to partner with a mortgage representative as early as possible, if you do not already have someone, your real estate agent can make a recommendation.

And if you don’t currently have a real estate agent, ask around. Someone within your sphere of family and friends probably owns a home and can offer a personal referral. Partnering with a mortgage representative early on will help you attain the most accurate, up-to-date information so that you can make your mortgage decisions with confidence.

Whether you are buying a home or looking to refinance, the first thing you should do is examine your finances very closely. You need to estimate what your financial needs and long-term objectives are. If you’re buying a home, you’ll want to determine how much of a home you can afford.

Lenders are apt to get you qualified for even more of a loan than you can probably afford, so it’s up to you to take stock of your income and expenses, both current and projected. This will enable you to decide what you can comfortably afford to pay each month. Keep in mind too that other fees, such as mortgage insurance, taxes, homeowner association dues and taxes can also be rolled into your monthly payment, so you need to account for those items when determining what you can afford.

If you’re thinking about refinancing you may want to consider taking out a home equity loan to pay for home improvement costs or to consolidate debt. Or if your goal is to build faster equity in your home and pay off the mortgage in a shorter period of time, you might be interested in refinancing to a shorter-term loan. Your monthly payment will be higher, but you will accumulate equity in your home much more quickly and save a significant amount of money overall. Regardless of which route you’re taking, you’ll want to examine your finances to determine the best options for your needs.

When you’re ready to begin “shopping” for a loan, your mortgage representative will present you with the best options for your personal circumstances. While there are many mortgage options available, the most common are the long-term fixed and short-term adjustable rate mortgages.

Fixed typically refers to the 30-year and 15-year mortgages and adjustable can be anything from a one-year to a seven-year adjustable rate mortgage. Again, the best loan for you is entirely dependent upon your personal situation, but all three types have their pros and cons. Your mortgage representative can best explain the various mortgage options that are available, but it might be helpful to read up on their definitions on your own ahead of time.

Whether you’re buying or refinancing, the loan application process is basically the same. If you’ve invested the time to gather all your personal and financial records, this step can be expedited much more quickly. The loan application will ask for information about your job tenure, employment stability, income, assets, and liabilities. If you’re self-employed, be prepared to provide tax returns — both personal and business.

The lender will run a credit check on you to analyze your credit status and you will also have to supply additional documentation such as paycheck stubs, bank account statements, divorce decrees, and proof of insurance. If you are deemed creditworthy your loan will be approved and the lender will hire a professional appraiser to insure that your home is worth the amount you have been approved for.

Historically low interest rates have made the dream of homeownership possible for record numbers of Americans over the last two years. Low rates have also made it possible for many homeowners to refinance so that they may pay off debt, eliminate PMI, lower their monthly payment, or pay off their loan in less amount of time. So, if you’re currently in the market to buy or you’re considering refinancing your home, now is most certainly the time to take advantage of the opportunities that exist for all homeowners.

(Editor’s Note: J. Lennox Scott is the chairman and CEO of John L. Scott Real Estate. You can visit his Web site at www.johnlscott.com.).