Improve credit. Pay off cards and keep the amount on the card below 30% of the maximum balance at all times. Repair any credit disputes or delinquencies. Your Credit Report is Free when you get it yourself, but if anyone else pulls it, your score may drop. The higher your FICO score, (between 300 and 800) the better rates you'll get. Use Experian, Trans Union or Equifax for free report.
To buy a copy of your report,
If you are a first time buyer or veteran, check for FHA programs that are much better deals and not carried by most good mortgage brokers.
If you have good credit and tax records then
your best bet is likely a bank mortgage. If you do not have all the documents
then using a good mortgage broker makes sense.
Call a banker, or good mortgage broker
to determine how much house you can afford, and how much you'll
likely be able to borrow. Warnings: Do NOT let them pull your credit
no matter how much they wail; Shop around and avoid online
applications; Get preapproved (not prequalified) to get the actual
amount you can pay. Most lenders allow you to put up to 28 percent
of your gross income or 36 percent of your net toward a house
payment. Many home sellers only accept offer from buyers who are
Banks will want a 10% to 25% down, brokers
can often get you in with 0% to 5% down. FHA loans for first time buyers get
you in for 1% to 3% down.
If 10%-20% down payment is too much and you have excellent credit or good credit and a steady income, good mortgage brokers can provide combination mortgages to cover 95% or even 100% of the cost of the home you find to purchase. The rate may be higher, but interest is tax-deductible and combined payments may still be lower than a first mortgage with PMI.
Get references and go with people you can trust for your loan!
Buying a home will probably be the biggest single investment you'll ever make. Choose wisely.