If any step in buying a home is confusing, complex, or tedious, it's figuring out how to get the right kind of financing. Finding a good lender that you can trust will make the difference and make the frustration factor of getting financing reduced.

The first step is to learn how home financing works. Basically, the process involves the following steps:

1. Checking Your Credit History
2. Getting Prequalified
3. Filling Out the Loan Application
4. Getting Preapproved

Checking Your Credit History
If your credit report has mistakes or other blemishes, your credit rating will suffer, and as a result, you will pay higher interest rates and may even be unable to secure financing.

Before you apply for preapproval, it is a smart decision to make sure your credit report (and therefore credit rating) is as accurate and positive as possible. You want to check your report because it's estimated that 20% of credit reports have significant mistakes (the Consumer Union says that 48% are inaccurate).

The first step is to get a copy of your credit report. There are 3 major credit bureaus, but since they don't share information, it pays to make sure that each report is error-free. Each report will cost around $10, and a merged report from all 3 is around $30. Make sure you utilize a reputable source such as myfico.com or you can call the credit bureaus directly:

Equifax: 1.800.997.2493
Trans-Union: 1.800.888.4213
Experian: 1.888.397.3742

To fix errors on your credit report or if you would like to improve any negative records, try the consumercredit.com site, which gives advice on how you can either remedy errors or start to establish a better track record with creditors.

Getting Prequalified
This is a very important step and will make the entire home buying process much simpler. You can find out more information about this step by clicking here.

Filling out the Loan Application
Filling out the loan application is really very simple.  And if you have the necessary paperwork ready to go, the process becomes a lot easier. Your mortgage lender will more than likely request the following documents:

• Application Fee (cost of appraisal and credit report).
• Copy of the sales contract signed by buyers and sellers.
• Social Security number of all applicants.
• Complete address for the past 2 years (including complete name and address of landlords for past 24 months).
• Name, address, and all income earned from all employers for past 24 months.
• Copies of previous two years W-2 forms.
• Copy of most recent year-to-date pay stub.
• Name, address, account number, monthly payment and current balance for: installment loans, revolving charge accounts, student loans, mortgage loans, and auto loans.
• Name, address, account number, and balance of all deposit accounts, including: checking accounts, savings accounts, stocks, bonds, etc.
• Three months most recent statements for deposit accounts, stocks, bonds, etc.

Getting Preapproved
Getting preapproved is a firm commitment from a lender to loan you up to a maximum amount without a specific property being identified.

Preapproval is a useful step because you go through the financing process before making an offer on a home, so the time required for the process itself won't jeopardize your offer. Many agents will require a preapproval letter from your lender before they will even start the home searching process. Lastly, once you are preapproved, closing the loan is quick, depending only on a satisfactory appraisal and title report of the home.

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