A recession brings on economic uncertainty. Consumers aren’t willing to spend money, and banks aren’t always willing to lend it. But believe it or not, a recession is a good time to save money on a home loan, as long as you are prepared.

A recession is a good time to buy a home because interest rates tend to be lower, which will save the buyer thousands of dollars. But that doesn’t mean you should go into the home loan process unprepared. First of all, pull your credit report.

You need a high credit score to qualify for good home loan rates during a recession. Check your report for errors, and if you find them, get them corrected. If you have high balances on your credit cards, pay those off. If you have late payments, establish an on time payment history of at least six months. A year is even better.

Money in the bank is needed secondly. A direct deposit, between 15-20% is needed along with reserves. Reserves are the money put aside in the bank for repayment of the first two to three months of the loan. The bank needs to make sure you have the appropriate income for the loan.

Also you must verify employment, income, and assets. You cannot just tell the bank you have enough money. Provide the bank with documentation including paycheck stubs and bank account statements.

The documentation is even more important if you are applying for a home loan during a recession because the lender needs proof you can afford the home loan and will make the monthly payments. Collect the necessary documentation early and have it on hand prior to applying for the home loan.

Although the current economy does not look promising, do not fear the chance of earning a loan. Home loaners still need business, but they will remain more selective until the economy changes. Inform the lender that you are speaking with other lenders and they will be more inclined to offer a cheaper deal.

Buying a home is time consuming and intimidating, but a lot of that stress is reduced with the appropriate steps already conducted by the prospective home owner. This includes a strong credit report and proof of available funds.

Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.