First-time homebuyers and those thinking about refinancing are in a great place.

Mortgage rates just fell for the third straight week, according to mortgage finance firm Freddie Mac.

The credit markets are still tight, but they have loosened up significantly from 90 days ago.

So is this a good time to enter a mortgage transaction? It might be, if you can qualify. The two biggest issues are going to be credit and down payment. Those are really going to trigger your ability to get a mortgage in a decent amount of time.

Here’s what you’re up against in specific mortgage situations and what you can do to increase your chances of getting a deal done.

If you’re buying a home
Get ready for paperwork. Have your bank statements, W-2 wage and tax statement and pay stubs organized.

Overdocumentation is the name of the game right now.  Having all the documents upfront will speed the application process.

Check your credit score. The most widely used score is the FICO, which ranges from 300 to 850. Your score, based on information in your credit report, helps lenders predict how likely you are to make your payments on time. The higher the number, the better the chance you’ll be approved for a loan at a low interest rate. Clean up your credit score.  Catch up on any late payments and pay off or pay down your debt.

First-time buyers have a sweetener in the form of an $8,000 credit on federal income taxes for homes purchased before Dec. 1.

It’s critical that you have a down payment because lenders want to see that you have skin in the game. Mortgages insured by the Federal Housing Administration require a 3.5% down payment, which can come from a family member, employer or charitable organization as a gift. For a non-FHA-insured loan, lenders are typically requiring a 10% down payment.

If you’re refinancing
Have plenty of equity. Equity represents the ownership value you’ve accumulated over time by making payments, and lenders want you to have a financial stake in the refinancing. The lender doesn’t want to lend 100 percent of the value of the property.

Another reason to build equity is that you don’t want to owe more on your home than it’s worth, a situation some homeowners face today.

Also, consider how long you plan to remain in your home, because you need to stay long enough to recoup closing costs associated with refinancing. Those costs typically will total $3,000 to $5,000.  If you’re going to move out of your home in five years or less, then typically it’s not going to be worth your doing.  If you plan on staying longer than that, then you need to look at the costs vs. the monthly savings to see how long it will take to recoup that cost.

Sometimes things outside your control can affect your attempt to refinance.

Loan modifications
A loan modification is when a lender changes the terms of your loan so you can afford your payments.

That can be done by lengthening the term of your loan, lowering your interest rate or allowing you to skip payments and adding those to the end of your loan.

The Obama administration is prodding mortgage-servicing companies to bolster their efforts to modify troubled loans. The servicer is the company that collects and processes your mortgage payment. It may or may not be your original lender.

If you’re having trouble making your payment, contact your servicer immediately and ask about a loan modification.