• Obtain a copy of your credit report from Trans Union, Experian, and Equifax and verify every item. If you find an error, report it immediately to the creditor and have them make a note of the disputation. Allow for as much as a year to be certain your report is blemish-free before you approach a lender. If your credit score is lower than you'd like, read the reason codes and begin to remedy them. Raising your credit score is not a quick process; slow and steady wins this race.
• Start paying down your debt. Some people pay off debt in one fell swoop, but lenders look back several years on your credit report, and sudden activity prompts a wary eye. Demonstrate your ability to pay down debt reliably with multiple, equal (or semi-equal) payments.
• Consolidate your debt, if necessary. If consolidation puts your total debt into a more manageable package with a lower interest rate, do it. Some lenders view consolidation favorably because you are taking an active role in your debt resolution.

Two to three months out:

Gather and organize your documents: When applying for pre-approval or the actual loan, you need to provide the following data.

• Home address or addresses for the last two years.
• Social Security number.
• If salaried, two years of W-2 or 1099 forms and one month of pay stubs.
• If  self-employed, two years of tax returns and YTD profit and loss statement.
• If you own rental property; rental agreements and two years tax returns.
• Documentation of non-taxable income, such as social security, child-support, or disability payments.
• Other assets, including value of automobiles and jewelry.
• Three months of statements for each bank, stock, and mutual fund account.
• Copy of the note on your first mortgage, if applicable.
• If applying for a home equity loan or refinancing, a signed letter stating what you plan to do with the proceeds.
• Copies of any IRA/401k or stock brokerage accounts.
• Copy of a divorce decree, if applicable.
• If not a U.S. citizen, a copy of your green card, front and back.

• You find out the maximum house you can afford, so you don't waste time looking at homes outside your price range.
• You have a solid base from which to negotiate with the seller since you have already been approved for a loan.
• You can speed through closing since your loan is approved.

• Income stability: Hence the two-year history for most of your financial documentation.
  
  
• Debt-to-income ratio: This should not exceed 36% of your monthly pretax income (28% for housing; 8% for debt).
  
  
• Loan to value (LTV): The ratio of the loan amount to the value of your property, which tells the lender how much equity you will have in your home. The higher the equity and the lower your LTV, the less risk to the lender.
  
• Property appraisal: A professional assessment of your property by a licensed appraiser. This ensures that its market value is sufficient for the loan amount. This lets a lender know that your collateral (property and down payment) will cover the loan amount in case you default.
  
  
• Title search: A lender requires a title search of your ownership documents, to verify that you have the legal right to sell your home. Accompanying the title search is a plot map or survey, which confirms the property boundaries as described in your Purchase and Sale agreement.
  
• Credit history: A lender can tell what kind of a borrower you are from your purchase and payment histories. This is when having already pulled your credit report and cleaned it up really pays off.
  

While you play no real role in the actual approval of your loan, there are a few things you can do to assist those who make the decision:

• Completely fill out your loan application.
  
  
• Respond quickly to any request for additional documents; it's possible that getting a great rate may depend on it.
  
  
• Don’t make a major purchase while your loan is being processed. Wait until the loan is closed, otherwise your debt increases and could adversely affect your chances for approval.
  
  
• Do not move money into your bank accounts unless it can be traced. If friends or family want to contribute monetarily, advise your lender immediately.
  
  
• Stay in town during the time surrounding the closing date. If you must be away, sign a power of attorney to authorize someone to sign for you.

• Bring a cashier's check, if required, for your down payment and closing costs. Most lenders will not accept personal checks.
  
  
• Completely review your final loan documents, verifying that the interest rate and loan terms are what you were promised, and that name(s) and address are correct.
  
• Sign your loan documents and seal the deal.