To prepare for your purchase: Start reading classified ads in the real estate section of your newspaper, visit open houses, tour new home communities on weekends, and search the Internet for homes—all this even though you’re not yet ready to buy. If you’re a veteran, send for your VA certificate of entitlement so that the option is open to consider a VA loan when you’re ready to purchase a home. Contact a credit bureau or check the Internet for a credit report on yourself, just to make sure that no mistakes turn up. You’re entitled to one free credit report a year from each of the three major credit bureaus. If you don’t like what you see, it’s time to try to clean up any problem items. Make an appointment with a lender and explain what your goals are. Then let the lender set up a plan for you to meet those goals after a review of your current income and debt situation. Also mention any anticipated increases in income, such as bonuses or incremental raises. Spend the money necessary for a pre-approved mortgage commitment. Sock away extra cash; you’ll be motivated to skip a vacation, a movie, or dinner out when you have a short-term goal like accumulating money for a down payment and closing costs. Try not to buy anything on credit, and if you do, pay it off quickly. This is not the time to take on another car payment, buy a boat, or even apply for an additional credit card. If you find that you cannot avoid having to buy something on credit and can anticipate that need, make sure the lender you work with figures that debt into your qualifications to buy. Don’t change lines of work. Lenders like to see a stable income picture, showing a demonstrated ability to earn an income in a particular field. Becoming a hairdresser, when your education and employment experience has been accounting for the past five years, is best done after you buy a house and not before. Changing jobs should be done only if the income for the subsequent position is equal to or greater than the previous one, and ideally in the same field. If someone is making you a large cash gift toward your purchase, try to get it into your savings account as soon as possible (hopefully several months) before you apply for a mortgage loan.
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