Past Credit Problems Wont Disqualify You For A Mortgage

Category: Finance, Real Estate.

Its very likely that you will never make a purchase as large as a home purchase. The home you purchase will depend very much on the amount of mortgage for which you qualify.

This is a very good reason to prepare for the process as much as possible. As a first time mortgage user, preparing yourself for the home buying process is the best way to set yourself up for success. Many first time mortgage users worry about saving up for their down payment and rightfully so. Making the Down Payment. A down payment can mean the difference between getting approved or denied for a mortgage. The good news is that, you dont have, for many lenders to make as high of a down payment as first time mortgage users have in the past. This is true for first time mortgage users and homebuyers who have obtained a mortgage previously.

First time mortgage users should keep these tips in mind when trying to reach a down payment goal. Consider your monthly income and expenses. First make sure the goal you are setting for the down payment is a reasonable one. Use this to decide how much you can reasonably set aside for the down payment. Set aside money for yourself first. Saving for your home shouldnt cause you to miss your other financial obligations. Before you pay any monthly bills or other expenses, set aside money for your savings or investment accounts.

Consider every dollar you spend on something you dont need a dollar that could have gone toward your down payment. Watch your purchases. Preparing Your Credit. Your credit history will be one of the primary factors used by prospective lenders to determine your eligibility for a mortgage. As a first time mortgage user, it is a good practice for you to begin watching your credit as soon a home purchases has been decided. Past credit problems wont disqualify you for a mortgage.

Even if you have had credit problems in the past, you can begin repairing your credit to look more favorable to lenders. Many lenders work with first time mortgage users that have less than perfect credit. Start by disputing inaccurate and outdated items from your credit report. Income vs. You can also pay down some of your debt to improve your credit history. Debt.

In general, lenders look for first time mortgage users to spend less than 35% of their monthly income to pay for monthly debt and housing expenses. To determine how much you can borrow for a mortgage, lenders compare your income to the amount of debt you have. The lower the percentage of income you spend on debt, the better your chances at obtaining a loan. You dont have to be intimidated by the mortgage process because you are a first time mortgage user. Avoid increasing your debt by making large credit purchases before applying for a mortgage. Being prepared with the knowledge of the lending process will ease some of the qualms you have about applying for a mortgage.