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When buying a home, shopping for homes may be first on your list. Getting pre-approved for a mortgage before making an offer on a home reduces stress and is useful for determining a range of affordable homes.

FHA Home Loans: 4 Things to Do Before Applying

These tips will help you prepare for applying for an FHA mortgage. It's best to prepare well before contacting mortgage lenders, and certainly before looking at homes.

Mortgage Loan Shopping: Doing Your Homework

Being financially ready for buying a home is essential; finding an affordable mortgage loan is your key to success. FHA approved lenders can answer questions and direct you to FHA mortgage loans suited to your situation.

  • Know your credit scores: You're legally entitled to free annual copies of your credit reports from Experian, Equifax, and Trans Union, but you'll have to pay for your credit scores. When buying a home, it's worthwhile to obtain all credit scores and previewing what mortgage lenders will see when they pull your credit information.
  • Review credit reports for accuracy: Reading consumer credit reports can be challenging, but it's important to verify the information contained in your credit reports. Errors can reduce your credit scores. Words of caution are in order; don't fall for scams promising to "erase" or "fix" bad credit instantly. Improving your credit takes time and dedication.
  • Reduce credit card debt: Ideally, eliminating all unsecured debt before buying a home is a great idea, but if you can't, plan on reducing credit card debt to no more than 30% of available credit. If you cannot do this on your own, seek help from a HUD approved housing counselor or non-profit credit counseling service.
  • Experiment with free mortgage calculators: Online mortgage calculators provide estimates of how much you can afford to spend and borrow for a home; compare multiple mortgage amounts, rates, terms, and more. Don't forget that mortgage calculators only provide general information; actual figures depend on variables including income, credit history, and employment.

Contact several FHA lenders to shop and compare mortgage rates and loan features.

Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.