While five to ten percent of a home's selling price is generally the minimum down payment required, buyers can begin their loan shopping by exploring the wide range of affordable down payment alternatives available today. Buyers should also look at reducing their personal debt. Most lenders prefer that long-term debt does not exceed 32 to 38 percent of a potential buyer's monthly gross income. Long- term debt includes mortgage payments, taxes, insurance and other debts that will take more than ten months to pay off. Making extra debt payments or paying off credit card balances can help reduce debt to an acceptable level.
Prospective buyers can also get ready to purchase a home by examining their credit record.
Borrowers should have a clean credit record, with no bills past due more than 30 days in the last year. However, many lenders are willing to overlook one or two problems on a credit report as exceptions in a buyer's credit history. It's a good idea to review one's credit report with a mortgage lender before considering purchasing a home, especially if there have been any credit problems in the past. Founded in 1969, Countrywide Home Loans, Inc., produces, purchases, sells and services loans for single-family homes. The company is headquartered in Pasadena, California, and has nearly 400 offices across the nation.