At the height of the financial crisis, those who were self-employed stood almost zero chance of having a mortgage application approved. But while many challenges remain, the situation is now slightly better for this class of borrowers.

"Lenders are now less paranoid about making non-standard mortgages because their financial picture has improved," says Keith Gumbinger, a vice president at HSH Associates (www.hsh.com), a firm that tracks the mortgage industry.

The slight easing on the part of mortgage lenders comes at a welcome time for many white-collar workers who, after losing their jobs during the recession, decided to start a home-based business.

"These are people who had substantial skills in such fields as accounting, graphic design, public relations and IT. Because they couldn't find employment to use their skills, they went into consulting," says Sid Davis, a self-employed real estate broker who's worked from home for a lengthy period.

Davis says many who've started a home-based business in recent years have found their current residence unsuitable. Because of that, they're now seeking to buy, and finance, a home to better serve their needs.

Davis encourages those who are attempting to grow their entrepreneurial operations to look for a property with a convenient main floor space for their office, one that also has a separate entrance for clients.

"If you can help it, you don't want your company hidden away in an upstairs bedroom," Davis says.

In addition, he says entrepreneurs seeking a good setting for a home-based business should thoroughly investigate whether any community they're considering allows, or forbids, such enterprises.

"Some homeowner associations don't permit you to have a business and are strict about their rules. Others don't have any such rules or are lax about the ones they have," Davis says.

Here are a few pointers for self-employed homebuyers:

-- Inform yourself about the basics of the current mortgage industry.

Many homebuyers -- especially first-time borrowers --are in the dark about the meaning of the word "mortgage" and how the system works. Because they lack any experience in this area, they're shy about asking questions, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents (www.naeba.org).

But as Berard says, the basic concepts of mortgage lending aren't so complex that you can't grasp them in a short period of time. Start with a basic Internet tutorial, available through the website of the U.S. Department of Housing and Urban Development (www.hud.gov).

Also, Berard recommends you buy a book or two on the subject and suggests "Mortgages for Dummies," by Eric Tyson and Ray Brown.

-- Seek out face-to-face meetings with mortgage lenders.

Most mortgage lenders are comfortable handling loan applications by phone, fax, email or overnight delivery. But Gumbinger, the HSH Associates vice president, encourages self-employed applicants to request a meeting in person.

"Meeting at the lender's office won't give you an enormous advantage. But it could help you make your case and mean you're treated somewhat more seriously," he says.

-- Bring your basic documentation with you to the lender's office.

Nowadays mortgage officers, (also known as "originators"), have to work harder than in previous years to assemble files that meet the exacting requirements of their underwriters. Because of that, they're grateful to borrowers who make their jobs easier through advanced preparation, says Dale Robyn Siegel, a mortgage broker and author of "The New Rules for Mortgages."

Siegel says ideal loan applicants who are self-employed collect key documents showing their financial strength before they even approach lenders. These include multiple years' worth of tax returns, along with statements showing the present value of such holdings as savings accounts, stocks, bonds and retirement funds.

Mortgage officers also appreciate applicants who've scrutinized their credit reports in advance of seeking a loan. That way, the prospective borrowers can identify and try to correct any inaccuracies or blemishes in their credit before submitting a loan application -- a step that's especially important for the self-employed.

Under federal law, you're entitled each year to one free credit report from the three large credit bureaus: Equifax, Experian, and TransUnion. Just go to this website: www.annualcreditreport.com to get started.

You'll also want to access your credit scores. Such scores, which draw on data from the credit bureaus, provide lenders with a quantitative measure of a person's credit risk. Most lenders use FICO scores, pioneered by the Fair Isaac Corp., or another similar scoring system.

Generally, you need to pay a fee to obtain your credit scores. One approach is to buy these through the Fair Isaac website: www.myfico.com. You can also receive credit scores through the credit bureaus. FICO scores typically range from 300 to 850 -- the higher the better.

-- Remain in close contact with your lender until your mortgage closes.

With a recent downturn in the number of applications to refinance mortgages, several major lenders have announced large-scale layoffs. That can mean heavier workloads for those still in the business.

Gumbinger says you can make life a little easier for your lender's office staff by staying in touch and responsive to their needs while your loan is in their pipeline. For example, that might mean responding quickly to their request for a profit-and-loss statement for your business.

"People who stay in touch are more likely to get their loan approved and closed in a timely manner. They're less likely to have their application stuck in a pile of papers on someone's desk," Gumbinger says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

For some homebuyers, it can be a tough choice between a townhouse, which offers freedom from the demands of upkeep, and the classical suburban house with four walls of its own and an expansive yard where kids and dogs can romp.

As American families become more diverse in makeup, fewer homebuyers are guided by tradition, according to Mary McCall, a veteran real estate broker and president of the Council of Residential Specialists (www.crs.com).

Often, the decision as to whether to choose a townhouse or a detached property comes down to the age of the homebuyers.

"Many buyers in their 20s and 30s are now more comfortable living in dense urban settings where their only housing choices are condos or townhouses. Meanwhile, many mid-life people, including those with school-age kids, still want conventional suburban houses with big yards," McCall says.

By the time they reach age 60, more buyers are attracted to the advantages of low maintenance than to spacious grounds. They may not be ready to accept life in an apartment complex, but they figure a townhouse is a good compromise between a detached house and an apartment.

Are you debating the pros and cons of a townhouse versus a detached, single-family property? If so, these pointers could be helpful.

-- Let location trump housing style when choosing a property.

The notion that location is more important than other factors has been conventional wisdom in the real estate field for decades and remains true, says Eric Tyson, a personal finance expert and co-author of "Home Buying for Dummies."

As Tyson defines it, a top location is not only one with a prestige ZIP code but also with low crime, access to high-quality public schools and proximity to such valued amenities as parks, movie theaters and fine restaurants.

Even purchasers who'd greatly prefer a detached house may settle for a townhouse if that lets them live in a neighborhood they couldn't otherwise afford. And Tyson says a townhouse in a top-flight community is generally a better investment than a detached house in a lesser neighborhood.

But what if you're focused on future appreciation?

In that case, your odds of the property gaining value are typically better with the detached house than the townhouse, according to Tyson.

"The reason to opt for the detached house is that it will have more land around it. And over time, the land should appreciate much more than the structure on that land," he says.

-- Seek out a bright, open townhouse.

Some homebuyers, especially those who grew up in a detached house, fear they'll feel cramped in a townhouse, and understandably so. That's because many older townhouses are narrow from side to side and deep from front to back.

But the good news is that many newer townhouses are proportioned differently, with wider rooms, large windows and high ceilings. Tyson says nearly all homebuyers prefer living in a property with an open, airy feeling.

But he says those planning to buy a townhouse with wide rooms should remember that their energy bills will likely be higher than for a place with narrower rooms and the insulation benefits of side-by-side living in an older townhouse.

-- Factor parking into your home-buying decision.

Obviously, anyone buying into a townhouse community is necessarily purchasing some degree of collective living, as well as some level of shared parking. Granted, you might have a garage or one to two reserved parking spots. But chances are you'll be sharing overflow parking with other owners.

Tom Early, a real estate broker who was twice president of the National Association of Exclusive Buyer Agents (www.naeba.org), says competition for parking spaces can be a major source of annoyance for townhouse owners.

He recommends that would-be townhouse buyers ask residents living there if there's sufficient parking for their guests.

"Conflicts among residents over parking can be a huge headache and a source of big-time distress. You need to think through whether or not you can handle this potential problem," Early says.

-- Seek housing in an area where residents are friendly.

Due to common ownership of grounds and facilities, residents of nearly all townhouse communities are bound together through membership in a residents' association. As Early says, the quality of interaction in that group can make a significant difference for the property owners there.

Members of a smoothly run association work together and set aside money for big-ticket outlays that their jointly owned property will require in the future.

"Check the minutes of the last three association meetings to make sure there's money set aside to cover major repair costs, like a new roof or the overhaul of the community pool. Otherwise one day you could be startled to learn you've been hit with a monstrous 'special assessment' for a lot of expensive work," Early says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

At a time when mortgage rates are volatile, potential homebuyers are understandably nervous about what's coming next. After all, higher rates could dramatically reduce their buying power.

But while mortgage rate changes are a perfectly legitimate concern, Guy Cecala, a home loan expert and the CEO of Inside Mortgage Finance magazine, says the overall environment for borrowers is improving.

"I wouldn't say lending standards have become loose. But they're gradually getting looser than they were right after the credit crisis," Cecala says.

To cite a few examples, he notes that many lenders have stopped demanding down payments as large as those sought in the immediate aftermath of the economic downturn of a few years ago. Nor are they insisting on as high a credit score.

"Finally, it's also getting easier to obtain a mortgage if you're self-employed," Cecala says.

He predicts that layoffs in the mortgage business -- like those recently announced by the behemoth Wells Fargo -- are destined to become widespread. But he says this shouldn't affect customer service because banks and other lenders are still hungry for business.

"What's going on is the right-sizing of the mortgage industry. That's due to the drop off in refinancing activity and the fact that home purchase volume is rising only slowly. But the industry still has plenty of capacity to make loans," Cecala says.

He encourages homebuyers -- especially first-time purchasers -- to seek out lenders capable of originating an array of different kinds of home loans. That way their customers are more likely to obtain the best type of mortgage for their needs.

"It used to be that FHA was the obvious choice of first-time buyers. But the insurance premiums on FHA loans have risen to the point that conventional loans could be a good alternative for more people," Cecala says.

Here are a few pointers for home-loan shoppers:

-- Start by going to the Internet for baseline data on mortgage rates.

Those attuned to the lending industry know that a wealth of information on mortgage rates is available on the Internet. As a starting point in their mortgage search, Eric Tyson, co-author of "Mortgages for Dummies," suggests that homebuyers visit the websites of Bankrate (www.bankrate.com) and HSH Associates (www.hsh.com).

"When you track rates online, you get good benchmarks that help you make sure any deals you're quoted are truly competitive with the market," says Tyson, a personal finance expert.

Should you apply for a mortgage through an online lender? On that point, Tyson advises caution.

"At the end of the day, you're probably going to be a lot more comfortable dealing with a local lender you can see face-to-face if complications develop," he says.

-- Try to get references from lenders you're considering.

Whether you're looking for a buyer's agent to help you locate the best possible property or seeking a mortgage lender, references are enormously helpful, Tyson says.

Tyson says a better way of learning about mortgage lenders is to tap into a database of customer reviews from a company that tracks service providers, such as Angie's List (www.angieslist.com).

"What you're looking for is much more than simply low rates. You'll also want a lender who can complete your transaction on time and with a minimum of hassle," Tyson says.

-- Ask your real estate agent for the names of several lenders.

Many real estate agents maintain a database of lenders who can be counted on for smooth mortgage processing. Knowing whom they can trust is vital to agents because they don't earn commissions unless their clients obtain financing and their transactions go through.

"Good agents aren't going to jeopardize their reputation by giving out recommendations for lenders who don't have a positive track record for performance," Tyson says.

He suggests that you ask your agent for the names of at least three lenders he or she trusts, knowing that at least one or two likely are affiliated with the agent's company.

"It's very important that you shop widely," he says.

-- Look out for red flags when interviewing lenders.

Most loan representatives work on a commission basis. What's more, the size of their commissions is often tied to the size of mortgages they make. That gives them an incentive to make the largest possible loans.

Because of this, Tyson says you should be wary of any lender who pushes you to take out a mortgage bigger than your comfort level.

"Good mortgage lenders are good listeners. They ask you questions about your plans -- including how long you intend to stay in the home you want to buy -- to determine the most appropriate mortgage for your needs," he says.

-- Remember the importance of your mortgage decisions.

The recent recession taught many people about the serious implications of making a hasty or ill-considered decision on home financing. Although abuses by lenders were widespread, many homebuyers allowed themselves to be lured into mortgages with provisions they didn't fully grasp.

With the current easing of lending standards, it's once again very possible that lenders could encourage you into a type of loan for which you're ill-suited.

Tyson says it's critically important to understand the terms and conditions of your mortgage financing before you close on a deal.

"Never forget that the mortgage you take out to buy a house is probably the single biggest financial obligation you'll ever make," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)