The Best Way to Get a Mortgage

Get a home loan and start building your dream

A lender approving your request for a mortgage loan can provide a major sense of accomplishment. Unfortunately, getting a home loan can prove challenging if you don't prepare for the process. Lenders take factors into account such as income and credit. Knowing what lenders look for when considering your application can help you get approved with few hassles.

Things You'll Need

• Credit report
• Tax returns
• Down payment

Instructions

1. Know your credit history and check your score. Check your credit report by ordering a free copy from Annual Credit Report. Check the report for information such as collection accounts and late payments that can disqualify you for a home loan. Get your credit score from Myfico.com to assess your rating.

2. Show income sources. Make copies of your most recent tax returns or paycheck stubs to show mortgage lenders. This information helps lenders determine affordability.

3. Improve credit before applying for a mortgage. Raise your credit score to 680 before speaking with home loan lenders. Establish a history of timely payments to demonstrate that you're able to manage credit wisely. Dispute errors on your credit report and discuss rapid re-scoring with your creditors. This method updates your credit report within 72 hours and quickly improves your score.

4. Lower debt to qualify for a mortgage. Too many debts can stop a home loan application or reduce the amount that you're able to borrow. Pay off credit cards and do not take out any new loans.

5. Look around and compare mortgage options. Credit score minimums vary depending on the type of home loan. Check with a broker to explore all your home loan options. Submit a request for free mortgage quotes. Quotes allow comparisons between lenders. You need to evaluate different loan terms, interest rates, monthly payments and closing costs.

6. Start saving early for a down payment on a mortgage loan. There is flexibility with regards to mortgage loans. Plan to spend between 5 and 20 percent on your down payment.

Tips & Warnings

• Mortgage debt cannot exceed 28 percent of your income, and total debts (which includes the home loan payment) cannot exceed 36 percent of your income to qualify for a home loan.

References

• Home Loan Learning Center: Qualifying for a Mortgage
• Lower My Bills: Mortgage Tips