Preparing your finances ahead of time can make the mortgage process smoother and help you feel confident when it’s time to buy. Here are some key steps to take as you get ready for loan approval.
Start a “Green File”
A Green File is a collection of all your essential financial documents. No matter the loan type, lenders will need detailed information about your finances.
Be sure to gather copies of:
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Bank account statements
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Investment accounts
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Credit card statements
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Auto loan information
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Recent pay stubs
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Two years of tax returns
Having these ready can speed up the application and approval process.
Check Your Credit Rating
Credit scores typically range from 400 to 800:
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620+ is generally considered good
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680+ is considered excellent and may help you qualify for lower interest rates
If your score needs improvement, ask your lender for guidance—and going forward, treat your credit like gold.
You can check your credit report through the three major credit bureaus:
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Equifax – (800) 685-1111
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Experian – (800) 392-1122
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TransUnion – (800) 888-4213
Savings and Debt
If you’re planning to buy real estate, it’s important to save for:
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Your down payment
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Closing costs (appraisal, escrow, title insurance, and other fees)
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Home inspections and related expenses
At the same time, work on paying down revolving and high-interest debt—especially credit cards—to improve your borrowing power.
Toe the Line
This is not the time to make major financial changes. Lenders value stability, so avoid:
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Changing jobs or careers
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Moving large amounts of money
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Making big purchases
Before making any major changes, consult your lender first.
Keep in mind:
A $500 monthly debt payment (such as a car loan or credit card) could reduce the home price you can afford by approximately $83,000.*
*Based on a 30-year mortgage at 6% interest.
