Tips for Getting a Mortgage When you Need It

By: Jim Olenbush

So you are ready to buy your dream home. If you're serious about buying in the near future, here are a few ways to make sure you'll get a mortgage when you need it.

First, submit a pre-qualification application to the loan officer or financial institution you have in mind. Oftentimes, going with the bank you already deal with will be your best bet, as they'll have some records of your finances already. However, you need to get the best deal possible, so you might have to look elsewhere to get it. Talk to several lenders to compare fees and interest rates. Don't be too hasty and jump on the first offer you get.

You want to avoid signing up for a loan that seems too good to be true. If a lender offers you a mortgage that doesn't require proof of income, be leery. These loans often end up having huge interest rates attached to them. In fact, it is this kind of lending that has led to the recent surge of home foreclosures. When the teaser interest rates adjust a year or two down the road, loan payments skyrocket, and the homeowner struggles to make ends meet.

The bank's goal is to get a payment from you every month-re-payment on your mortgage loan. They will asses your mortgage eligibility based on the maximum you can afford to put towards your mortgage each month. You will need to provide the lender with proof of employment and income. Be sure not to do anything that will jeopardize your eligibility for the highest mortgage possible. Here are a few things that can do that:

Let's say you buy a car or other big ticket item. Maybe you think you can afford to make payments on both a vehicle and a mortgage, but a large existing payment will dramatically reduce the amount of mortgage you are eligible for. Decide which you'd rather have, because it is a rare person who can afford both. Knowing this, your existing vehicle, or even a new-to-you used car, becomes far more appealing.

Whatever you do, don't change jobs. An unstable employment record is one of the biggest no-no's in the mortgage industry. Lending institutions need to know your income is stable, and in general, at least a year at one job is what it takes to assure them you have good financial footing. Even a transfer can leave you on shaky ground, so be careful to time your home purchase carefully.

Also, be sure to maintain good credit. Pay off as many debts as possible, and be sure to make all of your bill payments on time. To stay on track, it's a good idea to set up automatic bill payments for your non-variable monthly expenses. This way you don't have to worry about remembering which bills still need to be taken care of. It's also a good idea to save your credit reports to make sure that no mistakes are made, and so that you know exactly where you stand on all outstanding debts.

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