It is true that most of the people in America do not have the finances to purchase a home and pay cash or the equivalent for it. The American dream is to own a home and the main objective is to obtain a mortgage for it. This is what the mortgage lenders know and most of them are willing to be of help in this endeavor. It is very important to be well prepared when you are seeking the services of a home mortgage lender and there are some definite strategies that help you in this preparation.
The first step in your preparation for obtaining a mortgage is to make a determination of the amount of money you can afford to pay each month. If you take a month to track what it takes to handle all your household expenses and find out how much is left, you will have some idea how much can be applied toward the mortgage payment. Use a notebook and record every expense you have each day and include descriptions and the total amount spent on each transaction. If you keep an accurate record, you will be able to see where your money goes and then you can decide whether it is a necessity or simply a wanted item. By doing this, you should be able to cut down on some expenses or possibly eliminate them completely.
If you are able to change your pattern of spending by eliminating unnecessary expenses, you will have extra money to put into savings to go toward a down payment on a home. This money should be put in a separate savings account so you can earmark it for the single goal of a down payment for your house. If you put as much of your disposable income after necessary expenses into this account, you could quickly reach your goal of a down payment amount. Lending experts agree that a minimum of 20% of the total cost of the home is what you should make an effort to save.
You can prepare for a mortgage loan by cutting back or completely stopping the use of your credit cards. The only exception to this should be when you know the amount of the balance can be paid off each month.
After you have saved a good amount for the down payment on a mortgage, you will need to get a copy of your credit report. This can be obtained free of charge through a major credit bureau once a year. With this report, you can find out if your current credit score will allow you to qualify for a home loan. The credit report will also enable you to estimate what the probable interest rate may be for your loan. A higher score will get a lower interest rate, and if your score is low the interest will in all probability be several points higher.
When your credit history includes any delinquent accounts, you will have a much tougher time getting loan approval. The same thing applies to any collections or charge offs in your past. You may have to use your savings to take care of these problems in your credit report.
Trying to prepare your financial circumstances for a mortgage loan is an ongoing continual process. Plenty of time is needed to make sure you are ready to apply for your mortgage, and along the way, you will learn invaluable information on how to manage your finances.
Joe Kenny writes for Rebuild.org, offering mortgages, they also have some great offers on refinance for any homeowners looking to release equity.