How To: Qualify for a Mortgage Loan
Taking a mortgage loan may be daunting especially after the housing crisis of 2006 and the recession of 2007. However, if you are looking to purchase a house, this is the prime time to do it as you will pay a very good amount for a home that probably would have been valued much higher pre-2006. Qualifying for a mortgage loan is possible especially if you do your homework and meet the stringent borrowing standards that are still in place.
Good credit is important for qualifying for a mortgage loan. If you do not know your credit score you can find out the numbers from Equifax, Experian and TransUnion which are the three main credit reporting bureaus. Banks and other lending institutions use the credit reports from these three bureaus to determine if you qualify for a mortgage loan, the amount of interest that you will pay and other related decisions.
Your credit score should be at least between 640 and 680 to qualify for most mortgage loans. If your credit score is low, you can repair it so that after it goes up, you are able to successfully apply for a mortgage loan. You should also have active credit lines that go back at least six months so that the bureaus can generate your credit report.
Qualifying for a mortgage loan means that you have to shop around, do your research, compare different mortgage loans and apply for what suits you best. You have to look at the interest rates, the down payment amount that you will pay, the points and many other factors.
Many people prefer to rent as opposed to taking a mortgage loan because of the down payment. Depending on the location of the house you want to purchase, you may find that you will pay a low percentage or a no down payment loan depending on the attached stipulations such as the house must be in a rural community or outside of a metropolitan area.
Qualifying for a mortgage loan is not that hard once you do the necessary research you will find that it is a fiscally better option as opposed to renting in the long run. Factor in the taxes you will pay for your new home, insurance, the maintenance and other related expenses when calculating what kind of mortgage loan that you qualify for and the home you would like.
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