Get Pre-Qualified  -  Talk first with a lender before beginning your home search.  Pre-qualifying is free and gives you an idea of what you can borrow and how much home you can afford.  

Prove Stability  -  A mortgage lender analyzes not only your income sources and financial ability to repay a loan but also looks for patterns  that demonstrate stability and responsibility in repayment of debt obligations. Your credit report provides the best insight into your credit responsibility while continuous employment at the same company or line of business along with consistent or rising income, indicate stability and are also very important to the lender. 

Your credit history will be reviewed for at least a  3 year period as well as for any outstanding judgments or liens. In the interview, you  may discover past problems or erroneous information that your lender can help you correct. Certain situations, such as problems resulting from an extended illness, may be viewed differently by lenders.  Logical explanation will go a long way in helping convince a lender of your willingness to repay the obligation. 

Shop Mortgage Program - Not Necessarily Rate  Your situation will dictate what is the best option for you when it comes to buying a home.  If you only plan to stay in the home for 2 or 3 years, you may be better off with an adjustable rate mortgage (ARM)  that has a low initial interest and payment the first few years.  If you plan to live at the same location for many years, then a fixed rate loan may best suit your needs.  Points and fees will increase closing costs and should also be considered, particularly if "upfront" money is limited.  Do not be misled by a lowball rate - look at the total mortgage package and be familiar with the details.  Several first-time programs are available with some offering mortgages for as little as 3% down, easier qualifying guidelines, or reduced closing cost options. 

Seek The Help Of A Real Estate Professional  -  Ask a prospective real estate agent if he or she will be representing you as a sub-agent or as a buyer-broker agent and how familiar are they with the area you are interested in.  An experienced agent should be able to tell you all about the neighborhood including range of sales prices and appreciation rates.  

Do Your Own Research  -  Find out as much as possible about the neighborhood where you want to live. Investigate resales of properties to determine how prices are changing, compare recent sales to listed properties to determine the reasonableness of the offering price, investigate the school district, and check the previous sales and tax histories of any potential properties you might be interested in.

Make Detail Notes Of The Homes You Tour  -  As you inspect a home, make note of its positive and negative attributes and rate its overall appeal. Be practical and analyze whether certain features really contribute to value and have utility or will simply lead to future maintenance.  Be careful with homes requiring substantial repair particularly if you are on a limited budget.  Although you and a seller may agree to buy a home "as is",  if you are obtaining a mortgage,  the bank will likely require certain repairs be completed before closing.  This will require additional out-of-pocket funds which you must be prepared for.  Once you locate a home, have your agent write the offer "subject to" standard provisions which include a satisfactory home inspection, that the property appraise equal to or greater than the sale price, a clear termite inspection report, etc.  

Formal Loan Application  -  At formal application, the lender will provide a list of required documentation, a Truth in Lending Statement,  and a Good Faith Estimate which outlines the costs and estimated fees involved in processing the mortgage. If you pre-qualified before you began home shopping, most of the requested information will come as no surprise and you should be well prepared to quickly produce the requested documentation.  This will expedite the application process. You may also "lock-in" a particular loan program and rate or take a chance and "float" with the market.  

Make sure that you accurately complete the loan application form. Consumer misstatements about their financial assets was the number one source for mortgage fraud in the 1980's.  Mortgage lenders will verify the source of down payment funds to insure that the funds were not borrowed and that they have been on deposit for a certain period of time.  

Once the lender receives preliminary information, a letter of commitment is issued stating that the funds will be provided if all conditions are met..

Documentation Follow-Up  -  A loan processor will organize and verify the information provided on your loan application such as employment status, bank balances, and credit history.  An appraisal, termite inspection report, survey, and other required documents will then be ordered.  Final loan approval occurs only after a mortgage underwriter insures that the application meets lending guidelines and all required documents have been reviewed.  Loan closing is the last step in the process and this is when ownership of the property is actually transferred. 

What If I Am Denied?  -  If your application is denied, the lender is required to specifically cite the reasons why in an adverse action notice. The most common reasons for rejection include insufficient funds, excessive debt,  poor credit history or lack of credit.  Talk with your lender about ways you can improve  your situation.  Sometimes the lender may be able to offer another program with different terms or refer you to another  lender who might be able to help you.