5 Dos & Don'ts - Applying for a Home Loan

1. Do: Check on the status of your credit.

Do this as early as possible in the planning process – as much as a year in advance if you think there could be negative items impacting your credit score. This will give you time to pay off any outstanding debt to improve your score if needed.

2. Don't: Immediately begin buying furniture and accessories once your loan is approved.

Your credit will be monitored throughout the process, so be mindful of your spending and avoid opening any new lines of credit during this time.

3. Do: Have your down payment ready.

Before the housing market crashed, it was easier to secure a home loan with little or no down payment, but things have changed. Although some first-time home buyer programs offer payment options requiring little money down, increase your chances of getting a home loan by planning to put down at least 10 percent of the cost of the home.

4. Don't: Quit your job.

It's important to show how responsible you are when you're applying for a home loan. Lenders want to see a strong, reliable work history coupled with responsible spending before they're ready to help you get approved for a home loan, so stay put in your job during the application and closing process.

5. Do: Have your budget in mind.

You need to know exactly how much you can afford to spend each month on mortgage payments. Industry experts suggest a good rule of thumb is to keep your house payment below 25 percent of your whole income.

Approximately 31 percent of today's home buyers are first-timers.  Source