Before you can start looking for a property in earnest, you need to have your financing pretty much in order. That means, you need to find a reputable lender and put your soul on the line for their money.
The lending climate now, after the whole sub-prime mortgage fiasco and Baer Stearns shit hit the fan, is testy. It's not impossible to get a loan, but the restrictions are much, much tougher than they were a year ago. I am self-employed, which makes it even trickier to get a loan (for those of you who have an employer, your income is based on your net income, before taxes... but if you're self-employed, they consider only your gross income, after taxes and business writeoffs have been factored in). But still, like I said, it's not impossible.
The lender will run your credit report. If you're shopping for a loan, which you should do, it's not a good idea to allow every lender to pull your credit! Each time your credit report is pulled, your scores drop a teensy bit. So, do your shopping, find a lender you want to work with, and then allow that lender to pull your credit.
The lender will also want to see proof of income. For me (probably because of the self-employment thing), this meant providing copies of my tax returns for the previous three years. They'll want to see proof of any other income or assets you may have, as well... IRAs, stock portfolios, bank statements from your savings account.
In this current economic climate, it is nearly impossible to find a reputable lender willing to give you a loan unless you have a significant cash down-payment of at least 10, but preferably 20%... in addition to being able to show you have extra money sitting in savings as a cushion. This last piece came as a surprise to me. The bank wants to know for sure that if "everything goes to shit" (direct quote from my loan officer), you still have funds to draw from to pay your mortgage. Again, this may be an extra precaution that they take for us lucky self-employed people. Just be prepared for a wake-up call when you hear the final numbers.
Happy shopping!
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