1)      Check your credit.  You have the right to receive a free credit report once a year from each of the 3 major credit bureaus-Equifax, Experien, and Transunion.  There are also other sites that charge a fee like www.myfico.com or www.freecreditreport.com.

2)      Work with your realtor and lender to help determine how much you can afford and what product is best for you.   It is important to focus on what monthly payment you feel comfortable with and not how much the bank can qualify you for.  Generally, you should spend a maximum of 30% of your gross monthly income on your housing payment including taxes, insurance, and assessments if the property is a town home or condo.  Also, your total debt should not exceed 41% of your income.

3)      Ask your lender for your credit score.  More so than anything else this determines what rate you get.  In this market you need a score of 720 or higher to receive the best terms a lender has to offer This is not always the case but the higher the score the better the terms.  Having this information makes it easier to check lenders pricing as a credit score is needed to quote a rate.

4)      Shop around.  Although rates and fees are a very critical part of the process, make sure you get a recommendation from your realtor, your family and or your coworkers.    Knowing that someone you know has had a successful transaction with that lender will go a long way in giving you the confidence that they can close your loan.  

Writtne By Tony Pigatti of Archer Bank TPigatti@ArcherBank.com

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