Getting Ready to Finance a Mortgage

A Home Buying Article Contributed by Elizabeth Fox-Wise

Most Americans Will Some Day Finance a Mortgage

If you are like most Americans, you suspect that some day you will finance a mortgage. You have a dream of owning a home and you know that the only way that dream will become a reality is through a mortgage finance.

If you are also like most Americans, you worry that you will not qualify for a mortgage, and are afraid that you are not financially strong enough to be approved to finance a debt of that magnitude.

Qualifying to finance a mortgage is the biggest hurdle for many families in the process of becoming homeowners. However, there are some things that you can do to prepare for mortgage financing and to increase your chances of getting finance approval.

The Main Thing You Can Do to Increase Your Chances of Approval to Finance a Mortgage is Clean up Your Credit

It is amazing how many people do not know what is on their credit report. Sometimes the first time that a mortgage finance applicant sees his credit history is when he is sitting in the lender's office. That can be a big problem if there is anything on your credit history that is not favorable or is in error.

Before applying for a mortgage finance, you should request and review a copy of your credit history. It is amazing how many mistakes are made in credit history reports. If you find anything that is in error, get it resolved before applying for a mortgage finance.

If there is something on your credit history that is not an error, but is not favorable, viewing it an advance will give you time to prepare your defense for when the mortgage finance lender questions you about it, because the lender will. Be prepared with an explanation for the problem and an assurance that it is an isolated, past incident.

Besides your credit history, there is another aspect of credit that is often overlooked and that is the credit potential to get into too much debt. If you have several credit card accounts open (even if the balances are $0), it is best to close all but one account. Wait for the closures to be reported on your credit history before applying for mortgage finance.

Try to Save a down Payment of at Least Twenty Percent before Applying for Mortgage Finance

If you are considering purchasing a home. It is best to save as much money towards the purchase as possible before approaching a lender requesting he finance a mortgage for you. Most lenders will require that you have at least 20% of the cost of the home available as a down payment and then the mortgage lender will finance the last 80% of the value of the home.

The more money you have saved, and the larger down payment you are prepared to make, the easier it will be to get finance approval for a home mortgage. The more equity you have in the home, through your down payment, the lower the risk level to the lender and the better the mortgage rates and terms for the borrower.