It’s important to check your credit report before you see your lender because:

• Lenders check this to determine the amount of loan you qualify for.
• It allows you to correct any mistakes in the report before lenders see it.
• If there are any blemishes in your report that are not errors, you should be prepared to explain them to your lender.

You are entitled to one free request each year from each of the three credit bureaus; the best way to do this is to go online to Annual CreditReport.com.

You may want to check your credit score at the same time you check your credit report (usually for a fee). This score influences how much lenders are willing to loan you and at what interest rate.

Most lenders will give better financing terms to borrowers that can put a 20 percent down payment on the purchase. If you are unable to do so, you will likely be required to purchase Private Mortgage Insurance (PMI) and perhaps pay a higher interest rate.

A letter of pre-approval from a lender shows that they have checked all your documentation and are prepared to make you a loan. Getting pre-approved prior to starting your home search saves you time by:

• Keeping you focused on viewing only the homes that are within your budget.
• Helping you obtain your financing more quickly once you find a house you want to buy.

• DOWN PAYMENTS AGAINST SALES PRICE
• BUYER'S ESCROW FEE (ACCORDING TO THE CONTRACT)
• LENDER'S EXTENDED TITLE INSURANCE PREMIUM (ALTA)
• DOCUMENT PREPARATION (IF APPLICABLE)
• PRORATED TAXES (FROM DATE OF ACQUISITION)
• PRORATED HOMEOWNER'S ASSOCIATION DUES (FROM DATE OF ACQUISITION)
• RECORDING FEES FOR ALL DOCUMENTS IN BUYER'S NAME
• NOTARY FEES, IF APPLICABLE
• HAZARD INSURANCE PREMIUM FOR THE FIRST YEAR
• HOME WARRANTY IF PAID BY BUYER (ACCORDING TO CONTRACT)
• INSPECTION FEES (ACCORDING TO CONTRACT)
• BENEFICIARY STATEMENT FEE FOR ASSUMING EXISTING LOAN (IF APPLICABLE)
• LOAN FEES AS AGREED WITH LENDER
• INTERIM INTEREST ON NEW LOAN, PRORATED FROM DATE OF FUNDING TO FIRST PAYMENT DATE

A mortgage prequalification letter is an estimate that tells you the amount you'll be able to afford to borrow to purchase your new home.

Earnest money is the money you pay 1 to 3 days after the seller has accepted your offer. The amount of earnest money you pay varies, but it is typically 1-3% of the sale price of the home. In some areas, earnest money is a fixed amount.

You'll pay earnest money by cashier's check, personal check, or a wire transfer. Your earnest money will be deposited into an escrow account. Once the sale of the home is complete, the earnest money you paid will be applied toward your closing costs. If you back out of the sale due to a failed contingency, you can recover your earnest money in full. If you back out of the sale for reasons not covered by contingencies, you will forfeit your earnest money.

In real estate, escrow is the process of placing important documents, such as a deed or money, in the custody of a neutral third party until certain conditions are met. Escrow or title companies often oversee a real estate transaction, from the initial deposit to final funding, to ensure a smooth process.

Hazard insurance protects a homeowner against the costs of damage from fire, vandalism, smoke and other causes. When you take out a mortgage, the lender will require you to take out hazard insurance to protect their investment; many lenders will incorporate the insurance payment into your monthly mortgage payment.

• DOWN PAYMENTS AGAINST SALES PRICE
• BUYER'S ESCROW FEE (ACCORDING TO THE CONTRACT)
• LENDER'S EXTENDED TITLE INSURANCE PREMIUM (ALTA)
• DOCUMENT PREPARATION (IF APPLICABLE)
• PRORATED TAXES (FROM DATE OF ACQUISITION)
• PRORATED HOMEOWNER'S ASSOCIATION DUES (FROM DATE OF ACQUISITION)
• RECORDING FEES FOR ALL DOCUMENTS IN BUYER'S NAME
• NOTARY FEES, IF APPLICABLE
• HAZARD INSURANCE PREMIUM FOR THE FIRST YEAR
• HOME WARRANTY IF PAID BY BUYER (ACCORDING TO CONTRACT)
• INSPECTION FEES (ACCORDING TO CONTRACT)
• BENEFICIARY STATEMENT FEE FOR ASSUMING EXISTING LOAN (IF APPLICABLE)
• LOAN FEES AS AGREED WITH LENDER
• INTERIM INTEREST ON NEW LOAN, PRORATED FROM DATE OF FUNDING TO FIRST PAYMENT DATE

Writing a personalized buyer letter can create an emotional connection with the sellers. Showing a clear picture of financial strength, whether through a strong pre-approval letter or proof of cash funding can strengthen the buyer's image.

An escalation clause is a real estate contract, sometimes called an escalator, that lets a home buyer state by how much they are willing to increase their offer if the seller receives a higher offer from another interested buyer.

1. Review your credit reports ahead of time
2. Get pre-approved
3. Know what you want
4. Account for hidden costs
5. Get an inspection
6. Evaluate the neighborhood and location