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Getting a Mortgage when Others Can’t

Another year has come, and the stringency of bank loans is getting tougher. Less people are qualified because of loss of jobs and other unfortunate events, and even the people who are qualified are having trouble keeping up with the requirements of the banks. According to the present mortgage market conditions, people about the age of 50, self-employed buyers, and first time buyers are all going to begin to find it to be even more difficult to be able to pull a loan and get new lines of credit to get a new home in their names.

People who are self-employed will find it near impossible to find a home loan because of the crunch on self-certified mortgage loans – this is because of new government interference to who banks loan money to. However, this doesn’t mean you can’t plan for the best and hope for it too when you’re trying to find your new home no matter what category you fall into when it comes to employment or age.

Know your credit score up and down. Good credit is just a number, but with the increasingly difficult bars to jump when it comes to getting a loan, the items on your credit have become more important in the past few years. For example, if you have a loan you defaulted on awhile ago, even if your credit has recovered the bank can still hold that default against you – and they will if it means they think you’re a risk. You can order a free copy of your credit report from any credit agency, and there are online websites that help get you your score for free from a certain credit agency as well. If you want a good rate, you’re going to need a credit score of above 720 along with a pretty clear credit report.

Know exactly how much you can afford. If a lender hands you a $400,000 loan, that doesn’t mean you have to use all of it, and using less of it can actually save you in payments, interest rates, an d length of loan in the long run. Figure out what you can afford by tucking an estimated payment amount every month for six months to see if you can live comfortably on what remains. If you can, then you should be able to afford that payment and thus whatever amount you related to that payment – but don’t overshoot for more just because you find a feature in a house you like.

Consider your current debt to the monthly income you take (or your DTI). This is just how much debt you have compared to how much income you have, and it often affects your credit score. If the lender sees a high DTI score, sometimes he won’t loan to you at all. If he does loan to you, it will be at a higher interest rate or you will be offered a lower loan amount instead. Your debt can be credit cards, but also your DTI number includes car loans and student loans as well. If you want to lower your DTI, just start paying off your debt – plus this will free up more money for a mortgage payment every month anyway.

If you’re a struggling homeowner or perspective homeowner, find some professional help. There are also a number of loans you can acquire through different means other than just banks, and this could also be beneficial if you’re trying to buy your first home. Explore your options, and usually you can find one that will fit your financial situation so you can move into the home you want.

Author’s Bio: Valerie Anne B. Reyes is a freelance writer. She writes guest posts on personal finance websites, particularly those dealing with debt consolidation companies.