New homes for saleRemember how Spring was always the home-buying season? Don't count on that happening this year and you can point the finger, at least in part, at the new lending hoops buyers must jump through. According to MortgageMatch.com, one out of three home buyers will fail to get a mortgage this spring.

Understanding the mortgage process and meeting lenders' more stringent qualification requirements have become big obstacles for applicants, according to a survey the site conducted. Most recent home buyers -- 70% -- described the mortgaging process as more difficult than they expected. And those who bought homes during the bubble years, when mortgage loans were given out like candy at Halloween, are especially shell-shocked by the new lending standards.One of the biggest problems home buyers run into today concern their credit scores and how, in general, they don't work to improve them before applying for a loan. In the same vein, a recent Fannie Mae survey found that poor credit was the top reason that renters gave for not buying a home.

(Following closely behind poor credit was the self-awareness that they couldn't actually afford to buy or keep up a home and the perception that now is not really a good time to buy. Hooray for enlightenment on the first point, but with home prices back to 2002 levels and interest rates among the lowest ever seen, how isn't this a good time to buy?)

Back to the mortgagematch.com study: A full 35% of successful buyers said they didn't even know their credit scores when they started to look for houses to buy. Somewhere, a Realtor is clenching his or her teeth just reading that. These buyers decide they want to buy a house but don't know their credit scores? Home-buying is a process that starts with getting your financial house in order and then hitting the brick and mortar ones.

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Sue Stewart, senior vice president for Move, Inc. said, "Buyers who prepare themselves financially early before they start looking for a home will have a better chance of succeeding. If you want to be in a position to land the best mortgage ... get your documentation together and find a lender you trust."

Some tips before you apply for a mortgage to help you beat the odds:
  1. Pay down your debt. Reduce your total debt -- your monthly payments on cars, student loans, credit cards -- before you start the mortgage application. The goal is to reduce your overall debt-to-income ratio and improve your credit score. The somewhat unrealistic guideline that lenders want everyone to toe is that your total housing expenses not exceed 28% of your monthly gross income. For decades, people have exceeded that quite happily but now the lenders believe they know best and they control the money.
  2. Clean up your credit. Start with figuring out what your reported scores are. Obtain your free credit report from each of the three credit bureaus (Equifax, Experian and TransUnion) and carefully review them, noting all negative items. Correct inaccurate or outdated items. Your credit score needs to be a minimum of 680 -- preferably 720 or higher -- to qualify for a lower interest rate on a mortgage.
  3. Delay any large purchases, don't apply for any new credit until you close on your house. Lenders check credit reports at the time you apply and then again right before closing. A last-minute spending spree is going to be flagged. Once you clear the mortgage hurdle, feel free to move about the cabin and decorate your new house to your heart's content. (That's said in jest; charge wisely.)
  4. Increase your down payment. This reduces the loan-to-value ratio and improves your chances of getting a loan. How do you do this? You save up for it or call up your rich relatives. There are also a lot of community programs to help first-time buyers, so check around.
  5. Get your paperwork together. Your lender will want to see pay stubs, bank statements, assets, credit documents, income tax returns, all financial statements and possibly your fourth grade report card. OK, I made that last one up, but you get the idea. This is paperwork central. And you better make copies of everything you send them in case they ask you for it a third time.
  6. Develop some patience. You're going to need it.

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