The news is full of reports on the subprime mortgage mess. Foreclosures are rising dramatically, and mortgage delinquencies are at an all time high. What's more, the majority of adjustable loans out there are due to reset to higher interest rates—which means higher monthly payments—in the first half of 2008. All of this suggests homeowners and potential home buyers are in for a rocky ride.

But there is good news. Although lenders have tightened their standards, long-term mortgage rates for fixed-rate loans actually declined in the final months of 2007 and have settled at about 5.8 percent for a 30-year fixed rate.

So if you're thinking of buying a home or refinancing your mortgage in the coming year, it has never been more important for you to get your other house—your financial one—in order. That's the only way you can make sure the loan process goes smoothly. Ask yourself and members of your Money Group the following 10 questions to find out if you're ready for the mortgage plunge—whether you're a first-time homebuyer, trading up or trying to refinance. Then turn to the three tasks that will help you get the best loan that's right for you.

Finally, remember this important advice from Keith Gumbinger, vice president of the mortgage research firm HSH Associates. Beware the risks you're accepting when you sign any financial document, but especially a mortgage agreement. The one lesson we've learned from the current mess is that millions of people jump into mortgage products for which they are unprepared. Don't buy a house based on what the monthly payment is when you first get the loan, but rather buy a house based on what the monthly payment could be 10, 20 or 30 years down the road. Then determine if you can afford it.
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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