I can't stress enough to check your credit report FIRST! In many states, you can now get one for free. Be careful of getting them directly from the credit reporting agency, as they usually lack important information and are difficult to read, not to mention expensive. You can go to a mortgage company and pay them a small fee to pull a more detailed report, and will usually credit the cost if you get a loan through them. We got a two-person three-CRA combined report for $17, credited to our loan through a mortgage broker. You could find a lot of inaccurrate stuff on there, and some of it can take a long time to clear up. Do this BEFORE going to a bank.
Also, don't worry about banks checking your credit. Pre-qualification (only useful for shopping rates and getting an idea of how much you may get approved for) does not involve a credit check. Pre-approval does, but by then you should have picked out your bank/broker. Even if you get dinged several times, most modern scores count multiple hits for a single credit source within a short time (usually 2 - 4 weeks) as a single inquiry (it is considered a sign of wise credit use to shop around).
Also, prepare a DETAILED budget before going to a bank. You WILL wind up spending more than you do now; you better know just how much you can afford comfortably, and how much you can stretch for that really great house. Do not share this number with ANYBODY in the industry!
Buyer's agency means that the buyer maintains a fiduciary responsibility to you. He cannot share any information you divulge with the seller's, and is required to divulge anything he hears/knows/observes about the seller or the house to you. This does not eliminate the conflict of interest that commission-based sales generates; therefore you will want to interview several agents (hopefully, they will all be recommended to you by someone). If an agent gets most or all of their business through referrals, they are less likely to try to gouge you for an extra few thousand (maybe $100 in their pocket) since it could make you less likely to refer anyone else.
Choosing PMI or a high(er)-interest second mortgage for less than 20% down depends on a few things: Can you pay down the second mortgage early? If so, you might be able to eliminate much of the interest penalty. Are houses appreciating the area (or likely to) at an accelerated rate? PMI is supposed to be gone once you get down to 80% loan-to-value, and federal law requires it to be removed at 78%; of course, if you can demonstrate that the value has appreciated before the scheduled 80% payment date, you can have them remove it. This could be really useful in your circumstance, as you could perhaps put 15-17% down and use the rest for closing costs, then cease the PMI in a year or two when your loan-to-value hits 80% (a 6% loan in a 6% market with 15% down on a $300k house will hit 80% after 20 months).
If you can put that much down, you might also look into some of the loans that come with built-in home equity credit lines - they can be useful for consolidating debts, the limits grow with the equity in your home, and the interest is usually tax-deductible. If you go with built-in, that saves you the extra expense/hassle associated with acquiring one later on.
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