Here are some tips to help potential homeowners secure their mortgage loans.
1. Compare your credit reports from the three major credit bureaus. Each credit report will differ slightly. Make sure everything’s as it should be. Double check that there aren’t any errors. If there are, report them right away to try and get them fixed immediately.
2. Raise your FICO score. Your FICO score measures your ability to repay a loan. It’s determined by some calculated metric, based on your past credit history. Unfortunately, a lot of weight is given to this score, so a bad score can really put you in a hole.
3. Put down a large down payment. This will help ease the fears of default for home loan lenders. It shows you have money to spend and that you’re a serious about purchasing. Expect to pay up to 20% of your loan as your down payment. Not many lenders will give borrowers 100% financing anymore.
4. Increase your household income. When you have more money coming in, you’ll be looked more favorably because you have more money to spend. The chances of you defaulting is reduced in their eyes.
5. Expect and budget your mortgage payments to be approximately 25% of your monthly income. That’ll be what the lenders will look for. So to pass the loan decision process, plan for this. Budget accordingly. It’ll save you financially in the long run.
6. Defer your student loans for six months. This will help reduce your debt ratio in the eyes of the lender.
*http://www.usnews.com/blogs/the-home-front/2008/07/23/8-tips-to-help-you-qualify-for-a-mortgage.html