a strong desire to own your own home. Also,
like many Americans, you might be unsure if
you qualify for a home loan.
Qualifying for a home loan is the most common impediment to buying a house, but there are some things you can do to prepare and give yourself the best chance of getting into your dream home. Here are a few tips:
- Check your credit history. Visit your local credit bureau and get a copy of your file. Look it over and see if there are any errors or out-of-date negative entries. If so, file a dispute form and get them removed before applying for a home loan.
Are there any charge-offs or past-due accounts? If so, contact the lenders and try to make a deal to have those entries brought current or removed entirely. Again, do this before applying for a home loan.
- Do you have several credit card accounts that are open (even if the balances are $0)? Close all but one account and wait for the closures to be reflected on your credit history. Only then should you apply for your home loan! Too much outstanding credit (or the potential to create it) is a huge red flag for mortgage lenders.
- Try to save up a down-payment of at least 20% of the amount you intend to borrow. The more you have available for the down-payment, the easier it will be to qualify for a home loan and get the most favorable terms.
- Be realistic when predicting the size of the home loan that you'll qualify for taking into consideration your income, credit status, and the amount of your down-payment. If you try to buy "too much" house, you'll likely end up being disappointed.
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