How to Improve Mortgage Qualification
In the midst of the current housing turmoil, loan companies and banks have greatly tightened their lending approval. It’s necessary to get all of your ducks in a row in order to make the best impression possible regarding your ability to meet your mortgage obligations.
Other People Are Reading
Instructions
-
-
1
Check your credit report. Equifax, Experian and TransUnion are the three main credit reporting agencies. Choose one from their sites on the Internet. Once you get your credit report check to make sure everything is correct. If you find credit information on the report that you have not incurred, you must immediately report the problem to all three credit agencies. Any discrepancies should be resolved before applying for a mortgage.
-
2
Save money for a down payment. Going to a loan agency to apply for a home mortgage with a 5 to 10 percent down payment is almost necessary these days. It lets the lender know that you are a serious candidate who is willing to put his own funds on the line. The no-down-payment loans of the past are virtually gone. If you can find one, it is almost expected that interest rates will be very high.
-
-
3
Increase your FICO score. This is a score that mortgage companies use to determine if a borrower will likely pay back the loan. In order to increase your FICO score you must make sure all your overall debt is paid down. Your credit cards and accounts should all be paid on time and lowered. Try to keep some accounts at $0, if possible, to show the lender you have plenty of wiggle room.
-
4
Calculate your budget to know how much of a mortgage payment you can afford comfortably. Home loan payment should be approximately 25 percent of your household income. For example, if your income is $3,000 a month, your mortgage payment should be around $750. If you are only a one income family, consider how you can expand what you are earning to that of a two income family by getting a second job or starting a home business.
-
5
Stay with your current employer. Stability is a big plus in receiving the home mortgage you want. Continue being employed by the same company for at least two years--the longer, the better.
-
6
Save money. Saving additional money for that rainy day is imperative. No one knows what will take place tomorrow much less in the next thirty years. Experts say you should have enough liquid savings to pay for three months of your living expenses. This is a good rule to live by and will help to improve your mortgage qualifications.
-
1
Tips & Warnings
If you are not able to clear up a discrepancy on your credit report before applying for your home loan, consider writing a letter explaining the problem and what has and is being done to take care of it. This letter should be included in your loan documents to the mortgage company when applying.
