How to Qualify for a Home Loan Mortgage in 2011: The New Rules of the Game
10/01/2010 The real estate world has changed in recent years. The bubble has burst throughout most of the nation, banks have gone under, and lending standards are tighter now than they've been in decades. If you want to qualify for a mortgage, you'll have to adapt. Follow these five tips to secure the mortgage you need.
1. Save some money first. You need to pay cash for your down payment. Why? It's simple. Lenders want to see financial stability. If you're taking out a primary loan for your home purchase and a second mortgage to cover the down payment, you're already underwater. You just don't know it yet. You need to start out with some equity in your home. Lenders want to see this. They expect it. And the only way to get this is to make your down payment in cash.
2. Build up your credit score. Poor credit is not an option anymore. You must have a strong credit score with a solid payment history. If you want to take advantage of the best mortgage rates, make sure your credit score is as good as you can make it before you apply for a loan. Spend a year or two, or however long it takes, and repair your credit from the ground up. It will save you significant money in the long run.
3. Compare your options. You've got cash saved up. You've got good credit. Take the time to check out all your options. Different lenders offer different loan packages, and no two mortgages turn out exactly the same. Compare mortgage rates, compare loan terms, compare closing costs. Find the deal that offers you what you need. Nothing more, nothing less.
4. Find a reliable, trustworthy lender. This is huge. It's true that many of the scam artists in the mortgage industry have disappeared as a result of the economic downturn, but there are plenty of wannabes who don't know what they're doing and who won't be around in five years to help you with a refinance when the time comes. A mortgage is a long term relationship. Find a lender who is well established and trustworthy.
5. Get a fixed rate loan. This might seem like unusual advice, but it's part of the new game. Mortgage rates are as low now as they've been since the middle of last century. Lock in at one of these rates for the next thirty years and you'll be more than thankful for it when rates increase again. Adjustable rate mortgages have their place. Their place is "three years ago." Leave them there. Get a fixed rate mortgage and you'll be glad you did.
