Claire & Rory want to become homeowners but are not sure when they want to buy a home. They are not yet ready to talk to a loan officer but want to start planning. Here are four ways Claire and Rory can start to organize their finances before getting a pre-approval.

1.Review their credit reports

They can get a free credit report from annualcreditreport.com. They will want to check for the following:

1. Are all the accounts listed theirs?

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2. Are all the accounts accurate?

   1. Current balance

   2. Payment History

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3. Is their identifying information, correct?

   1. Name

   2. Address

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   3. Social Security Number

4. Are there any tax liens, bankruptcy, or judgments listed?

Although a credit score will be a factor in their pre-approval, it is important to also review their credit report. They can also get a snapshot of their credit score from their bank or credit card company.

2.Consolidate their bank accounts

If they have opened multiple checking and or savings accounts but only primarily use 1-2, they may want to consider closing and consolidating their accounts. This also includes if they have a joint account with family members.

The lender will need bank statements of any account you plan to use in the transaction (down payment, closing costs, fees, etc.) This will help reduce the amount of paperwork you will need to gather and provide to the lender.

(This tip is for Checking and/or Savings Accounts with the bank, which will not affect your credit score. Closing credit card lines might negatively impact your credit score)

3.Save for your down payment and closing costs

A down payment can range from 5% to 20% but they may also have additional upfront expenses to pay at closing which include:

• Credit report

• Underwriting fee

• Appraisal

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• Home inspections

• Title fees

Typically, they can multiply the purchase price of the home by 1%-3% for estimated closing costs.

4.Prepare your budget

Claire and Rory should build a sample budget of what their monthly expenses would look like after they buy a home. They can use a mortgage calculator to get a rough estimate. Don’t forget to add utility bills.

After Claire and Rory complete these four steps, they should feel better prepared to talk to a loan officer for a pre-approval. To get started on your pre-approval process, click here.