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Step 1
Save money. Even if you are getting a loan that will pay 100% of the home’s cost, most mortgage loans will have closing costs that you will be required to pay.
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Step 2
Know that past due unpaid debt, such as collections and judgments, must be paid prior to obtaining a mortgage loan because they represent a potential lien on the property. Lenders will usually not approve loans to persons who have these types of debts outstanding except in situations where the statute of limitations has expired.
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Step 3
Obtain a copy of your credit report. You can write to the main three credit bureaus (Experian, Equifax, and Trans Union) and request an annual complimentary copy of your credit report. Once you receive all three reports, make sure it is accurate and that all past due debt is paid current. If you are refinancing your home, most lenders will allow you to pay outstanding debt with the new loan you are making on the home. If you have a credit score of at least 620, then you will qualify for a good interest rate. If your score is less than 620, you may only qualify for a sub-prime rate, which is a higher rate.
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Step 4
Know that if you are self employed, you must have had your business for a minimum of two years. Your tax returns and bank statements will usually be required.
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Step 5
Consider that if you are employed by a company that you don’t own, you must be able to document your last two years of employment, provide your most recent pay stub and your most recent W-2 tax form.
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Step 6
Be aware that your income and credit score will tell your lender what type of loan(s) and what amount you qualify for. The higher your credit score and the greater your income, the more loan programs you usually qualify for.
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Step 7
Know that you must document your last two years of residency.
