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Getting your financial house in order

If you're planning to buy a home soon, it's time to get your financial house in order.

Start by ordering a credit report on yourself from TRW or some other company. They're found in the Yellow Pages of the phone book under the heading of "Credit Reporting Agencies," and they usually charge between $8 and $15 for their services.

If your credit report has any blemishes that you feel are unwarranted contact the creditor immediately and try to clear up the problem. Receipts and canceled checks can serve as proof.

Assuming you resolve the matter in your favor, both you and the creditor should send a letter to the various credit reporting agencies explaining that the dispute has been satisfactorily resolved.

Even if you can't resolve the problem, send a letter to the reporting agencies to explain your side of the story. This will show your lender that the matter is being disputed and that you're making efforts to clear up the issue.

Now it's time to get pre-qualified.

If you have had credit problems in the past don't be afraid to tell your lender about them. Lenders appreciate honest answers and good explanations.

If you're thinking of changing jobs while you're house hunting, you might want to think twice. Lenders are skeptical of applicants who change jobs every six months.

If you're planning to sell stocks or other assets to raise a down payment, or if you'll be getting financial help from your parents or another relative, it's a good idea to get the money in the bank now.

When lenders look at your loan application, they will pay close attention to your "debt ratios."

If you plan to make a 20 percent down payment and want a fixed-rate loan, the lender will probably let you to devote up to 28 percent of your gross pre-tax monthly earnings toward your housing expenses _ including the mortgage payment, property taxes, insurance, utility bills and any association dues.

However, your combined housing expenses and all other debt won't be allowed to exceed 36 percent.