Six Simple Steps to Ensure a Smooth Home Purchase

Buying a home can be an emotional, time-consuming, and complex process, but there are a few things you can do to help make the process go as smooth as possible:

1. Check your credit (best done at least a couple of months prior to the beginning of your search).
Before you apply for a home loan, regardless of your credit, it's a smart idea to obtain a copy of your credit report from the three major credit bureaus and review the information (I’ve included the contact information for these three bureaus at the end of this document). If there are errors or things that need to be addressed, it's easier to address them before you have found a house, rather than after you have found a house and are trying to close your loan.

If you are already aware that there are a few blemishes on your credit, you can let your lender know prior to his discovering it. This knowledge shows that you are on top of your financial situation, and it also gives you the opportunity to “sell yourself” to the lender and convince him/her that you are a still good credit risk. Lenders look at your credit to determine how likely you are to pay back the loan. If you had extenuating circumstances - like a loss of a job or medical bills - let the lender know so that he understands that it is not likely to happen again in the future.
Knowing what your credit report says in advance of applying for a loan puts you on the offensive rather than the defensive.  It also gives you the opportunity to make corrections to mistakes that may be on the report.  Making these corrections does take a couple of months, thus the suggestion to take this step prior to beginning your home search.

2. Get pre-approved for a loan prior to beginning your home search.
Many buyers think this is one of the last steps in the home buying process, but in fact, it is one of the very first.  Pre-approval means that a lender has reviewed your credit history, verified your assets and employment, and has approved your loan before you have found a home to purchase. As long as the home appraises for at least the purchase price, the loan should close.

Getting approved also gives you an advantage over other buyers. Your firm approval makes it easier for you to negotiate on the price of a home than a person who is not approved or is pre-qualified.  Furthermore, when looking at bank-owned homes, foreclosures, and short sales, you have to be pre-approved before the seller will even look at your offer.  Taking this step at the beginning will save you the heartache of finding the perfect home only to have it bought right out from under you while you are going through the preapproval process (I have seen this happen).

Don’t get “pre-qualified” confused with “pre-approved.”  Though it may sound official, it is not much more than giving the lender a few numbers that you “think” are accurate (regarding your income and debts), waiting on him to plug them in to his computer and then telling you what you qualify for based on what you have told him. No information is verified, and so, when you find the home of your dreams, you are sadly disappointed to learn that you forgot some of your debts or over-estimated your income when you went through the pre-qualification process, and consequently you don’t quite qualify for the loan needed to purchase the house. Take the time to get pre-approved; it will save you time and stress.