Buying a home, applying for a home loanBuying a Home - what to do before you apply for a loan

If you are thinking of buying a house within the next several months, there are some things that you should do before you actually start working with a lender.   Whether you are a first time buyer or have bought houses before, here are some tips to help you:  

1.     Get a copy of your credit report at least six months prior to applying for a home loan
This is something that all lenders will look at in depth when you apply for a loan to purchase a house.  The six month minimum lead time will allow you time to find errors and to contact your creditors about fixing or deleting those errors.  During this time you should also work on paying off or getting your past due accounts up to date so that you’ll have several months showing on-time payments.  You are allowed to get your credit report once per year for free from the three major credit bureaus at

2.     Pay off your debt
Try to pay off as much of your debt as you can.  If you do pay off any debt, do not close those accounts.  Having less debt will help you qualify for more money.  If you aren’t able to pay off debt, paying down the balances is important.  The banks like to see unused credit.  Having your credit cards and other debt maxed out will hurt you as you try to get a loan.

3.     Pay attention to your banking activities
Part of the process of applying for a home loan will be to provide bank statements.  All lenders will require this – usually several months of statements.  Lenders like to see a good credit balance each month and no bounced checks due to insufficient funds. 

4.    Stability
The bank will verify your job history.  They are looking at how long you’ve been in your job.  It is common for lenders to prefer buyers who have been in the same line of work for two years.  They are also looking for stability in your place of residence.  Frequent moving may be a red flag. 

5.    Get pre-approved
Once you have taken the steps necessary to get ready to apply for a loan and are getting serious about starting your house search, the next step is to find a reputable lender or mortgage broker. Talk to two or three different lenders.  Having a pre-approval from your lender is a must once you start the house-hunting process.  Your pre-approval will need to accompany your offer when you find a house you want to buy.