Prepare for the hunt
If the numbers make sense for you, taking a few steps at the beginning of the home buying process can save you time, money and aggravation.
1. Examine your credit. Right now, blemished credit or the inability to make substantial down payment can put the kibosh on your home ownership plans. That’s why it pays to look at your creditworthiness early in the home-buying process. Get your free annual credit report and comb through it for errors and unresolved issues. If you find mistakes, contact the credit reporting bureau to make sure they are corrected. It’s also a good idea to get your FICO score, which will cost you a small fee.
2. Get your docs in a row. Collect pay stubs, bank account statements, W-2s, tax returns for the past 2 years, statements from current loans and credit lines, and names and addresses of your landlords for the past 2 years. Have them ready to show to the lender. This may seem like a lot, but in this age of tight credit, don’t be surprised if your lender needs a lot in the way of documentation.
3. Find lenders and get pre-approved. Getting pre-approved for a mortgage helps you bargain from a position of strength when you are house hunting. The institution where you bank and a local credit union are good places to start your search. Applying to multiple lenders in the same month helps increase your chances of getting a loan approved at the best rate possible without dinging your credit score too much.