Getting Started
We are brokers, not lenders, so take this track as a description of how the loan side usually goes and what we see from our seat. For anything about rates, programs or what you qualify for, the answer comes from a lender.
Start a file
Whatever kind of loan you end up with, the lender will want to know a lot about you. Start a folder now (people used to call it a green file) and put copies of everything in it: bank and investment statements, credit card statements, auto and other loans, recent pay stubs and your last two years of tax returns. When the lender asks for something you will have it the same day, which helps later when there is a contract with deadlines in it.
Check your credit
Your credit history affects whether the loan is approved and what it costs. The three credit reporting agencies are Equifax, Experian and TransUnion, and you are entitled to free copies of your reports through annualcreditreport.com. Look them over for mistakes, because mistakes happen and they take a while to correct.
What counts as a good score depends on the loan program and changes over time, so ask a lender what they need to see. If your score needs work, ask them how to improve it and how long that tends to take. From here until you close, protect your credit and pay everything on time.
Savings and debt
Besides the down payment, you will need cash for closing costs, which include things like the appraisal, the lender’s fees, escrow and title insurance, and for the inspections you order while you are under contract. A lender can estimate those for you early. If you are carrying credit card balances or other high-interest revolving debt, try to pay it down, since a lender counts those monthly payments against you.
Keep things steady
Lenders like stability. This is a poor time to change careers, move money around between accounts, or buy anything expensive on credit. A new monthly payment, like a car loan, can take a real bite out of the price you qualify for. If a big change is coming, meet with a lender first and ask how to go about it.
Next is shopping for a loan.