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How to Qualify
for a Home Mortgage Loan
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Are you considering applying for a mortgage loan to purchase your first
home? If so, you should read the following tips below that will make
the process easier!
If You Have a Good Credit History It Is Easier To Qualify For a Mortgage
By far the easiest way to qualify for a home mortgage loan is by establishing
a good credit history. To establish a good credit history you need to
be able to demonstrate responsible repayment of smaller loans, such
as credit cards and car loans. The building of your credit history begins
the day that you put the very first debt into your own name. For many
Americans, this is at the age of eighteen.
Have a good solid credit history, shows the home mortgage lender that
you take financial responsibility seriously. This makes you, what the
lender terms, a low risk borrower. That is to say that you as a borrowers
are a relatively low risk in comparison to other borrowers.
In return for your good credit history, the lender will approve your
home mortgage loan application. In addition, he will offer you a lower
interest rate on the loan than would be offered to other borrowers who
are classified as high risk.
However, if your credit history is not as strong as you would like,
that doesn’t mean that you will have to give up on getting a home mortgage
loan. There are other things that you can do to increase your chances
for mortgage approval.
Save a Sizeable Down Payment
Having a substantial down payment on the home that you wish to purchase
and applying for a smaller home mortgage loan is another way to increase
your chances of getting mortgage approval. Again, this goes back to
the risk involved to the lender for financing your loan.
Many mortgage lenders will require that you have a 20% down payment
on the home, and then they will grant mortgage loan approval for the
remaining 80% of the purchase cost. This helps to offset the lender
risk. In the event that you are unable to keep up with monthly mortgage
payments and you default on the loan, the lender will have a better
chance of recovering his money through foreclosing on and selling the
home if the loan is a smaller percentage of the market value of the
home.
Therefore, if you can save 30% or more towards a down payment on your
home, you will be lowering the risk to the lender and increasing your
chances of getting mortgage approval.
You May Have To Accept a Higher Interest Rate on Your Mortgage Loan
If you wish to secure a mortgage despite your bad credit history, and
you do not have a sizeable down payment saved up, you may have to agree
to a mortgage at a higher interest rate than that which is being offered
to low risk borrowers. This is because the lender will want to be compensated
for his increased risk level.
This should not necessarily prevent you from taking the loan, though.
If you secure the mortgage and are diligent about making timely payments,
after paying on it for awhile you will improve your credit history.
Then you can refinance the mortgage at a later date with a better rate
offer.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
Credit
Score Information Directory
Other Credit And Real Estate Related Information
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