The holidays are upon us and if you haven't already, you will likely soon be hearing the song, "The 12 Days of Christmas", or seeing any one of a number of "Top Ten Things You Need to Do in 2010" lists. While you won't find 12 things, or even 10 things here to think about when considering a mortgage, you will find several things you need to be aware of when seeking mortgage financing.

We May Never Pass This Way Again
It is said all good things must come to an end. While this may not be true in all areas, with phenomenally low interest rates, it is true. Mortgage rates have been artificially low for the last twelve months, thanks to support from the Federal Reserve and U.S Treasury.

Last November, liquidity in the financial markets nearly evaporated in many respects, leaving mortgage companies with few buyers of mortgage backed securities (MBS). On many days the interest rate for a 30-year fixed rate mortgage was at or above 7.00% for a zero point loan depending on the lender.

The Federal Reserve announced a program where they would purchase $1.25 trillion of MBS on 11/28/08, causing mortgage rates to plummet. This program is scheduled to end in March, 2010 and the ultimate impact on interest rates is unknown. However, you can expect that rates will return to "normal" at some time in the future.

While it is not expected that rates will return to the average rate since 1971, a throat grabbing rate of 9.00%, many lenders are currently debating business plans for rates potentially increasing significantly from current levels next year.

Look for YOU Magazine's complete mortgage market projections in next month's issue of YOU Magazine.

Know Your Numbers
During the boom, it was not uncommon for prospective home buyers to discover they could qualify for a housing payment that, in conjunction with their other monthly debt, would consume a majority of their income.

Examples of this could have included total monthly obligations that could meet or exceed 60% of one's monthly income. Obviously, this could and did create issues for people when the joy of owning a new home was quickly replaced by the sinking feeling that their mortgage payment was now causing extreme financial hardships.

In the month of December, many home lenders are pulling the maximum amount of monthly debt that someone can qualify for, including a housing payment, at 45% of monthly gross income. For many folks, this amount may still be too high based on other payments including child care, insurance or other routine payments not inclusive of normal qualifying debt.

While lenders may have a maximum amount you can allocate to housing, no one knows what you are comfortable paying more than you. To ensure you won't get into trouble later, express to your mortgage professional what you are comfortable paying and use that number to back into the maximum house you can buy.

Credit – Know Thy Score!
During the boom, obtaining a mortgage with a FICO score in the low 500 range was not unreasonable. In fact, provided you were willing to accept the payment, you could even do so with little money or no "skin" in the game.

In much the same way you cannot get yesterday back, if you have a FICO score that needs, shall we say, improvement, you may be unable to get a mortgage today. Depending on your lender, the amount of your down payment and the mortgage program you are applying for, the minimum standards for qualifying could be the lowest FICO score of either borrower, with a minimum score of 680.

For those applying for a loan guaranteed by the FHA, lower scores could still get you in that home but standards have risen there as well and can vary by lender.

The best path to take before you sign a purchase contract or apply for financing could warrant having your credit profile checked out by your lender in advance. If you need assistance improving your score and credit profile, they may be able to recommend a company or individual that can provide you educational assistance.

Ratios a Little High?
If you have just submitted your offer on your first home, you may be inclined to make an offer that might be a little over your "comfort" zone with either what your payment will be, what you qualify for, or what will make you a little short in the wallet.

One way to help your cause is to ask for a little help, and this doesn't necessarily mean hitting up mom and dad for some extra cash. Turn your request to the seller instead and you may find that not only will you get what you need but you might get a little more "juice" as well.

You should know that both qualified first time home buyers and move up buyers are eligible for a "gift" from Uncle Sam in the form of a tax credit. So, you may be getting some money a few months after you close. But, did you know if the seller pays to lower your interest rate, which could help you either qualify or make it a little easier to make your payment each month, that you could be eligible for an additional tax deduction?

The IRS treats "points" or fees paid to lower your interest rate as an item which is deductible on your income taxes and it doesn't matter who pays them. So, let's say that your seller agrees to pay two points toward lowering your interest rate, which could drop your rate by approximately half a point as an example.

If the amount paid is $4,000, or two points on a $200,000 loan, you will not only get a lower rate but potentially another $4,000 deduction on your income when you file your tax returns, potentially putting additional money in your pocket after you file.

The key here is to make sure when you are negotiating your purchase contract, you ask the seller for a concession for buying down your interest rate. The concession can be either in the form of a dollar amount requested, a percentage of the sales price, or a percentage of the loan amount. Ask your mortgage professional for additional guidance as to the best path for you to follow.

Short Some Cash?
There is a lot of chatter in the media how people need to put more money down when buying a home. While down payment requirements have increased for some programs, it is still possible to buy a home with less than five percent and also NO money down. Yes, you did read you can buy a home without a down payment.

The loan program that allows for you to qualify with as little as 3.5% down is one that is guaranteed by the FHA and the ones that allow for no down payment are those guaranteed by the VA and USDA.

Granted, there are restrictions with each of these programs that can include maximum loan amounts based on your location with FHA loans, income and property requirements for those offered by the USDA, and your qualifying status as an eligible Veteran. However, the ability to purchase a home with less than five percent down is still a possibility for millions of Americans.

Also, keep in mind that sellers may still offer concessions in the form of paying closing costs which can also decrease the amount of funds you may be required to have to purchase your next home.

When Was the Last Time You had a Checkup?
Most people have no qualms about making an annual trek to their family physician to check their health. However, when was the last time you had your mortgage checked out? As a mortgage is often the single largest payment someone makes each month, it can also be the cornerstone in which a financial plan is based.

With interest rates near all time lows as of the time this article was written, many people may still be able to restructure their mortgage to free up cash that can be appropriated to other asset building investments or debt relief.

Pick up the phone and call your mortgage professional this month to determine if the mortgage you have still matches with your short and long-term financial goals. At a minimum, you may find that you are in great shape and no changes are needed. However, you may also find that you may be able to improve your situation.

In either case, you should be able to sleep better at night just knowing that you have checked to ensure that you are still on the path to where one day, you will either no longer need a mortgage or will have enough liquid assets to help you manage the situation to the best of your abilities.