How can you prepare for buying a home?
The best way to prepare for buying a home is to make sure your financial picture is a healthy one. Gather your financial information and talk to a number of mortgage lenders to find the best rates available. A lender will look at your:

• employment history, Lenders typically consider two years of steady work in the same industry as employment stability.



• current debt and your credit history and rating, Lenders will make decisions based on your current debt. When they run a credit check, they will find a record of your consumer loans, including automobiles, education, and credit card debt. When you begin to think about buying a home, you should postpone other large purchases. The important thing is to keep your credit rating high by making all your payments on time.



• records of all your asset and liability accounts, When you begin to think about buying a home, gather the following asset and liability information and have it ready for mortgage interviews:


• Social Security numbers for you and spouse, if you are both applying for a loan.



• copies of checking and savings account statements for the past six months.



• evidence of other financial assets, such as IRAs, CDs, bonds, stocks.



• paycheck stubs for the past two months.



• a list of other personal property including life insurance and retirement accounts.



• outstanding debt details including account numbers, balances due, and monthly payments on credit card loans, student loans, car loans, and installment debt.



• copies of your last two years' income tax returns, or originals of W-2 tax forms from the Internal Revenue Service.



• name and contact information for employment verification for the past two years.



• current and previous addresses.



• if you own a home bring the address, current market value, mortgage lender name, account number, current monthly mortgage payment, and outstanding mortgage balance.



• if you currently rent bring the address, name and contact information for your landlord, monthly rent, and previous landlords to cover a two-year period.



• if you already have an agreement to purchase bring a signed copy and any amendments, a copy of the listing form, the legal description of the property, and receipts for down payment.

If you find yourself facing special circumstances, be prepared to provide other relevant information:

• If you are separated or divorced, you must bring legal documentation in the form of a divorce decree or separation agreement. You must also bring documentation of child support payments.



• If you are using any type of public assistance, (e.g. disability, Social Security) as a part of your income, you must provide documentation.



• If you have declared bankruptcy, gone through foreclosure, or had any other credit-related judgments against you over the past seven years, you must bring documentation from the proceedings.

Shopping for a lender
As soon as you are ready to begin looking seriously for a house, select a lender (bank or mortgage company) and ask for a pre-qualification or pre-approval letter. These documents are very different.

A pre-qualification letter is an informal way to assess how much you can borrow. To issue the letter, a lender will often pull a credit history to confirm all the financial information you provided, but the lender is not obligated to give you a loan. It does not promise a loan.

A pre-approval letter can be provided quickly and it is valid for 90 days, so don't ask for it too soon. A lender will put your application through a preliminary approval process. This takes longer to process than the pre-qualification letter. A pre-approval letter is a lender's commitment to lend to you, so it provides strong support when you are ready to make an offer on a home.