1. Know how much you can afford.
• On average, you can multiply your gross income by 2.5 to determine the mortgage you can afford. For Example: If you make $100,000 then you can expect to be able to afford a $250,000 mortgage. If you have other debt, you will want to be conservative and multiply your gross income by 2. If you have zero debt, then you can estimate with a mulitplier closer to 3.
2. Study your credit report.
• The interest rate can change your monthly payment more than the actual mortgage amount, so you want to make sure you get the best rate. You will need to make sure there isn't a surprise problem on your credit report. This is second on the checklist because it might take a month or two to resolve any issues on your credit. Everyone is entitled to one free credit report a year from AnnualCreditReport.com
3. Figure out what type of mortgage fits you best.
• There are typically two types of mortgages.
• Fixed Rate Mortgage
  • 30 Year Fixed Rate Mortgage: This is the most common type of mortgage because payments are typically lower and payments are fixed so you know exactly how to budget each month for the next 30 years.
  • 15 Year Fixed Rate Mortgage: For those homebuyers looking to pay off the mortgage early, this is a great route. The mortgage rate is typically .50% lower on a 15 year mortgage. Although you pay the mortgage off in half the time, your payments will only increase by an average of 30%. For example: If your mortgage payment on a 30 year is $1,000 you can expect a 15 year mortgage on the same amount to cost you about $1,300 a month. For those who can afford it, this is a great option.
• Adjustable Rate Mortgage
  • ARMs are becoming more uncommon because of the associated risk. Typically the rate is lower than a fixed rate mortgage, but after a set number of years the rate can change, leaving the home buyer at the mercy of interest rates.
4. Get a Pre-Approval Letter
• You are not picking your lender right now, only getting a pre-approval letter. Typically, your bank has a mortgage lender that can get you pre-approved. Some lenders require you to fill out an application, others do not. The pre-approval needs to be done before you find an agent because agents want to know you are able to buy a house before showing properties.
5. Find a real estate agent
• Your real estate agent will make your life much easier in the home buying process, so be sure to choose wisely. Find someone experienced in the areas you are looking for and that you get along with. You will be spending alot of time together.
6. Put a contract on a house
• Hopefully, with the help of your real estate agent, you were able to get a great deal on your dream home. Make sure you have a contract in place to find a lender and lock in a rate.
7. Gather Proper Documentation for Lender
• Pay Stubs for the last two pay periods
• W-2 for past two years
• If you are self employed you may be required to provide 2 years tax returns
• Bank statements to show your current assets.
8. Choose a Lender
• Lenders need a contract before they can lock in a rate and give you a firm good faith estimate, which is why we don't recommend choosing a lender until you have a contract in place. Now that you have a contract on a house, you can shop for the best mortgage lender. It is important to note that not all lenders are created equal. Some charge much higher fees while others may have a history of not closing on time. Ask friends and family for referrals and call local banks. Each lender should provide you with a good faith estimate which will give you a detailed summary of all their fees and costs.
9. Decide when to Lock your Rate
• Once you have a lender, it is up to you when to lock in your rate. You are required to have a contract on a house before you lock a rate, but you don't have to lock a rate right away. Rates are always changing, so if you are comfortable with the rate you are given today, then it is advised you lock it in.
10. Close on your House
• Assuming that nothing went wrong in your home inspection and nothing fell through with the contract, you can now close on your home. Your real estate agent and mortgage lender should be able to walk you through this step.

Congratulations, you completed the mortgage checklist!