Despite all of the changes in the real estate industry, one fact remains steadfast: the home loans of today are decidedly different than they were even a year ago.

Stricter Home Loan Guidelines

Because of the $400 billion Freddie Mac and Fannie Mae debacle, lenders are slightly more particular to whom they will lend money for home loans, and that’s putting it mildly.

Unlike the last few years, when the stock market was soaring and homes were flying off the market in less than a day, lenders are now scrutinizing each and every loan applicant in an effort to avoid defaulted home loans.

What does that mean for you?

It means you must have your ducks in a row, so to speak, when you head to your home loan lender.

Putting Yourself in the Best Home Loan Light

The following tips will help you prepare yourself – and your credit – in anticipation of a home loan:

• First things first: order a copy of your credit report from all three major credit reporting bureaus – TransUnion, Equifax and Experian. Don’t forget that everyone is entitled to a free credit report every 12 months.  Don’t pay for your credit report without checking into your eligibility for a free credit report.
• Once you have ordered and received your credit reports, go over them carefully and diligently, and highlight any discrepancies or errors. Then, immediately report these errors to the correct credit reporting agency (each of your credit reports may have slightly different information on them). The credit reporting agency will likely file a report to have the issue researched. It is important to understand that this process could take a few weeks to several months, so take care of any problems immediately as to avoid problems with your home loan acceptance.
• If you notice an outstanding debt that you have long forgotten about, it’s important to know that it’s not too late to contact the creditor and settle the debt. Although the debt will still appear on your credit report, it will also show that you have settled the debt.
• Pay down as much debt as possible. Many lenders of home loans are now not only paying attention to your credit history, but to your debt-to-income ratio as well. Your debt-to-income ratio is essentially the ratio between how much you earn and how much you pay in debts every month. Thus, paying off your debts, like credit cards, can only help you in terms of your debt-to-income ratio and your home loan acceptance.
• Don’t forget that monthly payments, such as your utility bills and your student loans, can greatly affect your credit score, so always make it a point to pay all of your bills on time, regardless of what they are.

Preparation is the best way to help yourself secure a good home loan.  Start months in advance to put your credit in the best light possible – which will pay off with an affordable home loan for years, if not decades, to come.