Qualifying for your First Mortgage

| March 31, 2010 More

Back of the house, from the field
Before you go looking for that American dream and scouring the newspapers and open houses for that perfect home you should first find out how much home you can afford.

Lenders use a certain formula to determine how much they’re willing to lend you, but you can roughly count on three times your total annual income, before taxes. Of course this is just a rough estimate and a lot of other considerations will be evaluated first. And you don’t have to buy a home that falls in that price range, it’s not only allowed but in most cases you’re better off if you purchase a home that is less than the amount the mortgage lender approves you for.

Before you meet with a mortgage lender it is a good idea to get your credit rating in order, pay down your bills, and set aside a down payment.

The first step is checking your credit reports for any errors and cleaning up any black marks on your rating. The higher your credit rating the better.

Your next step is to pay down or off your debt. Mortgage lenders will look at your budget and your debt and use this to determine how much they’ll lend you so it really is a benefit to have as much debt paid off as possible.

And finally, having a down payment used to be optional or very minimal for home buyers but after the housing crisis that has changed and having a down payment can affect the interest rate you’ll be asked to pay.

Getting approved for a mortgage shouldn’t be an impulse decision, you need to prepare for your mortgage meeting so you can get the best deal possible on this huge investment.

Creative Commons License photo credit:?tomeppy

Category: Mortgages

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