For most of us, the process of buying and owning a home carries with it the prospect of borrowing most of the purchase price. Few Americans pay cash for their homes, especially their first home, and the attendant fear of making a mistake has prevented many a would-be buyer from moving forward.

That fear is well founded, because buying a home is typically the largest financial transaction we ever undertake. A half a point here or an acceleration clause there and you could be in real trouble.

To help ease this crisis, I have assembled my list of the top ten most terrible mortgage mistakes that people most often make. See if you have avoided them successfully:

1. Not Seeing Your Credit Report In Advance. Almost everything about your home loan is based on your credit score, and your credit score is a direct function of the information contained in your credit report. An error or misreported late payment can have a dramatic impact on your score. And that score change can have a dramatic impact on your ability to get the home loan you want.

Get a copy of all three credit histories long before you plan to buy a home, so you have time to correct any errors or resolve any disputes that may be festering. Georgia residents get two free copies of their report annually from each of the three bureaus, so you have no excuse. Call Equifax at 800-685-1111, Experian at 888-397-3746, and TransUnion at 800-888-4213. The TransUnion report includes your score for free. Scour each report for erroneous information, and clean up problems well in advance of your loan application.

2. Choosing Your Lender Based On Agent Recommendation. Your real estate salesperson is likely a highly-trained marketing professional, who is well qualified to assist you in considering all the options available in the home buying process. But that does not make them a financial expert, especially when it comes to picking the right loan or lender for you.

Certainly you should consider their recommendation, but be aware that it is legal for agents to accept monetary payment for referring you to certain lenders. This practice is called a "controlled business arrangement," and the agent must give you written notice of his relationship with the lender. But in my opinion, it makes no more sense to select a lender based on your agent's recommendation than to does to buy a house based on your CPA's thoughts.

Get lender recommendations from financial professionals you trust. Start with your banker, ask your attorney and your CPA, and even talk to neighbors and friends about their experiences. At least they have no conflict of interest in their referrals.

3. Not Shopping for Your Mortgage & Comparing Costs. Yes, it is true that almost all the good loans available in today's lending market conform to FNMA/FHLMC underwriting guidelines. And yes, it is true that all conforming loans are pretty much the same when it comes to the contract language.

But no, it is not true that all loans have the same interest rates and settlement costs associated with them, and that is where the difference lies. Call lenders and ask "what is your thirty year fixed rate today at zero discount points, and what would the closing costs be on a loan of, say, $125,000?

That question requires the lender to give you the true interest rate stated on the face of the mortgage, so you can compare one lender to the next. And ask the lender to fax you a "good faith estimate" of the closing costs so you know exactly what you are paying for. Lenders are required to give you this estimate within 3 days of loan application, but I recommend you get it in advance. It's a great way to compare apples to apples. And if any lender tells you they are too busy to fax over an estimate, go elsewhere. They are also too busy to do business with you.

4. Not Getting A Fixed Rate Loan. Here we are in 2003, at the bottom of a 40 year interest rate cycle, and there are still folks out there getting adjustable rate loans. Let's think...is it more likely that the interest rate will go up or down over the next ten years? I'm gonna guess that rates will go up, so now is not the time to select a loan that adjusts your interest expense upward every time rates rise.

I know you think that the London Inter-Bank Offering Rate offers you complete protection due to the stability demonstrated in certain past years. But I think Europe is in a recession right now, and that after we have our economic recovery, they will be right behind us. And when that happens, your LIBOR loan may teach you a lesson about economics you'll never forget. Stick with the fixed rate programs.

5. Not Getting Your Rate Lock In Writing. This is so obvious. When your lender tells you your rate is locked, ask for a written confirmation of the terms and expenses that same day. If you don't get it in writing, it's your word against theirs. Just do it.

6. Paying For A Bi-Weekly Loan Accelerator Plan. Lenders claim you'll save thousands in interest by paying them a fee to accept 13 monthly payments a year instead of 12. In fact, most home loans today don't carry any pre-payment penalty. That means your set-up fee of $350 and your per-payment fee of $6 is totally wasted.

Furthermore, when interest rates are this low, it probably doesn't make sense to pre-pay on your loan anyway. The American obsession to own our home free and clear of any debt is, in my opinion, largely a legacy of the Great Depression. And while I am not suggesting that freedom from debt is a bad idea, it just might not make economic sense. If available, I would select a 100 year fixed-rate loan and lock in today's low rates forever. Earning a higher return on alternative investments makes that strategy worthwhile.

7. Getting a Home Equity Loan Now When You Should Refinance. Home Equity Lines of Credit are wonderful things. They typically come with no closing costs whatsoever, and allow us to tap into the growing equity in our home on an "as-needed" basis. That makes them great financial tools for converting personal debt (like a car loan at 8%) into fully tax-deductible debt (typically at or near the Prime Rate of 4.25%).

If the resulting interest savings is applied to pay down the loan balance, the overall savings are significant. But there are times when a comprehensive refinancing can make more sense.

For example, if you use a home equity line of credit to pay for a major addition to your home, you have certainly increased your home's value. But it doesn't make sense to stick with an adjustable rate program like a home equity line, when the alternative is now to refinance your entire debt at a low fixed rate. Rates are likely to rise in the future, and almost all Equity Lines float with the Prime Rate. Don't let that feature end up costing you money in the long run.

8. Refinancing When Your Spending Is Out Of Control. All the best financial advice in the world is worthless if you can't control your personal spending habits. And if you steal the equity in your home to pay for your credit card and personal spending spree, you had better change your ways.

Remember that home loans are typically secured by your residence, and that means trouble if you get into a financial mess again. The foreclosure laws in Georgia are swift and final, and can be summed up in the phrase: "if you don't pay, you don't stay!"

Instead, if you are concerned about your spending and borrowing habits, seek help from Consumer Credit Counseling Service. Unlike many other agencies, this one is truly focused on helping the consumer get back on track at the least possible expense.

9. Assuming All Home Mortgage Interest Expense Is Tax-deductible. In most cases, all of the interest on debt used to purchase or improve your principal or secondary residence is deductible. But there is a limit of one million dollars on acquisition debt.

In addition, you can almost always add up to $100,000 of home equity debt, and that money can be used for any purpose. But as is the case with most tax law, there are certain exceptions.

If you refinance a house that has increased dramatically in value, pulling more than $100,000 out for personal purposes, you may very well exceed IRS limits on tax deductibility. Because most home owners depend on this generous deduction, losing it may mean the difference between making payments and foreclosure. Talk to your tax professional about "acquisition indebtedness" and your home mortgage interest deduction.

10. Borrowing Too Much. Just because the lender is willing to lend you the money doesn't mean you can afford it. In today's lending environment, lenders are pushed to lend as much as their underwriting guidelines will allow. The responsibility to make sure that payment is comfortable rests on your shoulders alone.