Get your credit report early before you need a mortgage.  Go over it with a mortgage professional.   This is the key for anybody who has not gotten a mortgage before.  A mortgage professional can help you raise your score, tell you what you need to do to qualify for a loan, what steps to take to improve your score, remove the collections, remove the errors, and lower your debt.  They can tell you what steps you need to take to qualify for a home loan.  Go 2-6 months before you start looking for a home.  The mortgage professional can save you time and money.   Get pre-qualified before searching for a home.  This way you will know how much of a home you can afford.

Make all debt payments on-time (home, car, credit cards, etc)  This will help your credit score.

Don't open or close any new credit cards, or credit accounts.  By closing an account it could make your credit score drop.  Keep it open and just don't use it.  Also buy opening new accounts you can lower your credit score.  Don't open them unless absolutely necessary.  Keep credit card balances below half the maximum limit.  Don´t buy a new car before buying a house.  The car payment will raise your debt-to-income ratio and may prevent you from qualifying for a home mortgage.

Most lenders like to see two (2) years of consistent job history.  If you´re thinking about changing jobs, wait until after you´ve purchased a home.  Don't take unpaid time off as your income may not be enough to qualify for a new home.  Lenders take an average of your last 2 years of income.  If you are do to get a raise, wait to apply until after the raise is in effect.

Don't bury yourself in debt. It's fine to want the best home you can afford, but be certain that it is comfortable affordability. You don't want to be house poor.  If you think you can live with a $1500 a month payment.  Save that amount for 6 months and see how you live.  If you are paying only $900 in rent put aside $600 a month.  Mortgage lenders can usually loan you more than you can afford.  It is up to you to decide what you can truly afford.  Mortgage lenders can stretch your qualification ratios (the ratio of your total mortgage payment to your total income) because the banks allow them to.  The traditional ratios--the mortgage payment as 28% of your income and the total of your mortgage payment plus your monthly debt payments as 36% of your income--are good basic guidelines.

Get your budget under control. Spending some time reviewing your budget (or developing one if you don't already have it) and sharpening your money saving skills can bring big rewards later. A coordinated budget allows you to get the most home for your money without strapping yourself while eliminating wasteful spending.  Lenders like to see borrowers with some cash reserves in the bank.  Start saving now!

Prepare to pay off small debts.   Pay off all small bills and/or collection accounts.  Pay down all your debt.  Put a little nest egg aside.  You will need things for the new house.  Having 3 credit card balances, for example, one with a $210 balance, a second with a $165 balance and a third with $325 balance will only cloud the picture. Even though the total is only $700, all 3 will have minimum payments, credit lines, etc. If possible, prepare to pay them down to $0 balances, but don't close them. That could hurt your score and your chances of getting a loan. 

Deposit ALL of your paychecks into your checking account.  If you need cash, take it out in a separate transaction.  Lenders will use your bank statements to see how much money you have coming in each month.

Begin to gather documentation. It is not necessary that you have all items on hand before you apply, but there are a number of documents you will need eventually and the approval process will go much smoother if you begin to gather them now. Examples: W-2's and income tax returns from the last few years (especially if you are self-employed), copies of your latest pay stubs, records of any child support or alimony (either going out or coming in) and bank statements for all accounts (checking and saving) for the last several months.  You will need all pages of your bank statements and all pages of your asset statements (401k, mutual funds, stocks).  These statements need to be current, the latest ones available.   Keep all records!  This includes bank statements, divorce papers, bankruptcy discharge papers, etc.

Don't forget about closing costs, tax pro rations. In addition to down payment downpayment, you will need money for closing costs. Depending on the type of loan and your location, these costs can range from 2-5% of the mortgage amount, will be paid in cash at the closing and cannot be borrowed funds.  Or you need to tell your real estate agent you need closing costs paid by the seller if you do not have the money or if you want to have a safety nest egg. 

Make sure a lender is reputable.  Check out how long they've been in business, and make sure they don't have any complaints with the Better Business Bureau. 

Focus on closing costs and rates.   Ask lenders to detail closing costs and rates. Take time to scrutinize the differences across the board between lenders. 

Compare. There are lots of sources for mortgage funds--be sure to make comparisons.  Be certain to compare equal down payments, downpayments and loan types.

Consider points when comparing. Your total mortgage cost will be determined by 3 factors: The interest rate, the term and the amount of closing costs.

Get educated! Securing a mortgage is not all that complicated, but if you approach it blind, mistakes can be very expensive! Get as much information as you possibly can.  Go to my mortgage section 

By following these hints will help you stay out of foreclosure.  I would rather have you buy a smaller home than lose a big home and your money 2 years later.  These tips will help you when you are ready to buy a Livonia Home, Novi home or any home in Wayne, Oakland, Livingston, Washtenaw counties.  Good Luck  

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