How to Up Your Odds of Getting a Mortgage

November 14, 2009 Filed Under: Mortgages

Perhaps you have found the house of your dreams and are now talking to banks about getting a mortgage. If your credit is on the fence, you might be wondering whether or not you are going to even get approved for a mortgage. Without a mortgage there is probably no way that you can get a house, so you are trying to increase your chances of approval. What exactly are you supposed to do?

Do your research. The very first thing you want to do is to figure out what your financial history is. If you don’t know it, you are going to want to get your credit score. This score is going to tell you whether your credit is good or not and is the number that banks look at to determine if you are a high risk or a low risk. If your score is not that great, you may find that it is difficult to find a bank that is willing to lend you the money that you need. On the other hand if your score is great, you will find that banks are fighting for your business and may even offer you special deals to take out your mortgage with them.

Know where your money is going to. When you go in to talk to banks, take a copy of the budget that you drew up that shows exactly how much you are currently spending on renting a house and how much you would pay with your mortgage payment. When banks find out that you are able to afford the mortgage payments they are going to be more likely to approve the application.

Don’t forget about your down payment. Most people buying their first home don’t have a big enough down payment saved up. Unless you have a perfect credit rating, a lot of banks aren’t going to want to take the risks if you don’t have enough money to invest in the house. To improve your chances of getting approved, save up at least 20% of the price of the house before applying.

Find a cosigner. When your credit is not so great, a lot of banks are going to ask for a cosigner, which is someone who is going to put their house and mortgage on the line in case you don’t pay. If you have someone who will do this for you, this is going to drastically increase your chances of getting that mortgage. A lot of people are going to be reluctant to cosign for you if you are fiscally irresponsible.

Learn about the real estate market. You may not know this, but you are going to get a better mortgage when the real estate market is sizzling hot. A lot of banks are going to hesitate when loaning money in a cooling market because property values could decrease significantly.

Find out about your neighborhood. Some bank officials are going to ask you about how much houses in the neighborhood sold for in the past. When they find out that you know how much your future neighbor’s house sold for three years ago, they are going to be impressed and give you the loan

With the economy not being so hot, it is getting more and more difficult to get a mortgage. Following these six tips is going to drastically improve your shot at a mortgage.