So, you want to buy a new home? Planning for that now, taking steps to simplify your finances, and gathering the documents you need in advance will make your first visit with a loan officer easier.

• Credit, debt and your good name – Early in the process, pay down debt. In particular, eliminate small remaining balances and close out any lines of credit you don’t use, want or need. If you have too much available credit, it may hurt your ability to secure a mortgage. Order a copy of your credit report from all three reporting agencies to ensure that they are correct well before you meet with your bank or financial institution. If there are any corrections that need to be made to your credit reports, you should make them before applying for a mortgage. It’s a good idea to check your credit regularly, at least once a year, for monitoring purposes.

• Prepare a budget – Although the typical guideline is that a mortgage payment can be 28% of your income and the total monthly debt load (including a mortgage) should not exceed 36%, your situation is unique. A good solid budget will help you to determine where you are now and will help forecast what type of mortgage payment you will be able to make comfortably. A new house should make your life more enjoyable and a proven budget will help ensure that your purchase does not increase your stress level. You deserve to be comfortable.

• Gather documentation – Before meeting with your banker or loan officer, you will need to collect several documents to expedite the pre-qualification process, the pre-approval process and the final loan approval. You will need the following documents with you for your first meeting:
  • W-2 and income tax returns for the previous year (more may be requested if you are self-employed)
  • Copies of pay stubs for the last three months (and spouse’s paystubs if you are married)
  • Financial records related to child support (if you are paying or if you are receiving payments)
  • Financial records of alimony (whether you are paying or receiving)
  • Bank Statements on all accounts (including investments) for six months for you and anyone purchasing the house with you