For many of us, purchasing a home has been a long-term goal.  Whether it is a move-up home or your first venture into the real estate market, there are several things you can do now that will make the mortgage approval process less cumbersome and a lot less stressful.  Finding the perfect new home may be the easy part—assuming you have the right real estate agent, but obtaining approval for financing the purchase may not be so easy.  We agents want our clients pre-approved before we start the home search, but a pre-approval is not guaranteed financing.  It is simply getting past the initial review.  Here are a few ideas that anyone considering a home purchase should take into account:

-1) Check your credit report—this is something you should do on a regular basis, but particularly if you are contemplating a new or existing home purchase.  It’s possible, of course, that everything on the report is correct, but often items are reported incorrectly and eliminating those errors can be a frustrating process.  You can get them corrected, but it often takes several months.  The errors must be removed because they are in effect, reducing your purchasing power.

-2) Reduce credit card debt—your payment history and outstanding balance owed is quite important when purchasing a home because it affects your debt-to-income ratio.  Talk with your lender or financial advisor before closing any open credit.
-3) Down payment programs and reserves—There are a few “First Time Home Buyer” programs available, but they may be featured for an area in or adjacent to a downtown area.  The USDA zero down payment programs may still be available in select areas.  These programs are not available for all areas, but many buyers have benefited from them.  Whether choosing a conventional loan, a FHA loan and, occasionally even a VA loan, buyers should plan to make a down payment.  As a rule of thumb, FHA loans require a minimum of 3.5% down, while Conventional loans generally require more.  If you receive funds for the down payment from family or friends, be sure to check with your lender about the need for a “gift letter” and perhaps a separate account for the funds.  The New Year brought changes to the rules and regulations pertaining to mortgage loans. 
-4) Pre-approval letter—In advance of viewing homes for sale, you should speak with the lender of your choice.  If you don’t have a lender, your agent can provide a list of names with contact information.  The pre-approval letter shows the amount you are qualified to spend for a home.  The pre-approval letter is the maximum you should consider, but remember that you control how much you choose to spend on your home. 
Once you have the pre-approval letter, it is time to look for an agent.  My suggestion is to interview two or three agents and see which one(s) you like best.  You can also search online for an agent, you will find websites, rankings and more.   Good luck with your home purchase!