A Few Ways To Prepare Your Finances Before Beginning The House Hunt

Before you head out to look at homes, write up offers and (hopefully) get into escrow, you'll want to have your finances in good order and know what you're getting into. A good credit score can be the difference between buying now or having to wait, between a great interest rate or a "just happy to qualify" rate. Looking ahead and taking steps to prepare your credit ahead of time can pay (literally) handsome dividends. A few tips to help out:

• Talk to a mortgage specialist. It's their job to help you and that means prepping you to qualify ahead of time as much as it does taking care of your loan while you're in escrow.
• Gather your documentation and keep it organized. When you apply for a mortgage loan, your lender will need complete financial documents to determine your ability to borrow. This includes pay stubs, tax returns, W2s and bank statements, etc. Don't pack anything up too soon!
• Exercise caution when opening new credit accounts. Balances on new accounts can affect your debt-to-income ratios and reduce the amount of home you can buy. New inquiries into you credit history can lower your score.
• Exercise caution when closing accounts. Lenders look to your history and health of credit accounts as a part of determining your ability to borrow and repay. Active accounts with a good payment history can demonstrate an ability to use credit responsibly.
• Keep working! Lenders will look over your employment history, as much as 2 years or more, to determine financial stability.
• Save, save, save. The more money you have saved up, the better your profile will look.
• Don't forget anything! Be sure to pay your bills on time. One late payment can drop your score or jeapardize your loan.

These are just a few tips; please consult with a mortgage professional for more, including a review of your credit report.