Four Tips for Getting a Mortgage Loan

As you approach your first home loan, you may be filled with an understandable amount of anxiety, accompanied by a whole load of questions. Maybe your head is swirling with terms such as "high interest rates" and "loan terms", but you don’t really know what to make of the situation. The first step you can take to getting approved for a mortgage loan that is appropriate for you and your budget is researching the terms for a conventional home loan. As you approach the approval process for getting a mortgage loan, consider some of the following tips you can take to ensure success.

One: Check Out Your Credit Score

This step is convenient and only takes a few minutes. If you review your credit history and score before approaching a lender, such as NLC Loans, you may recognize right away that you won’t qualify for a conventional loan. You might, on the other hand, recognize that you have plenty of room to negotiate because of a healthy credit history. You may even discover that you’ve been the victim of identity theft, recognizing that you’ll need to do some cleanup work before you apply for a loan. (If your score is less than 680, you’ll probably be denied a conventional mortgage loan.)

Two: Save Up Your Down Payment

If you don’t have any money available for a down payment, you’ll probably find that your request for a conventional home loan is quickly denied. Some lenders would approve zero-down loans in the past, but they have become a little more cautious these days. You should aim for 3.5 to 20 percent of the loan as a down payment. The closer you get to that 20 percent, the lower your house payment and better your private mortgage insurance will be. You may also be able to save for the closing costs, home inspections and appraisals, title searches and related fees. This generally adds up to another three to five percent.

Three: Reduce Your Debt

Sometimes potential homeowners get excited about moving into a house and run out, filling up their credit card with new furniture purchases. This additional debt could put a strain on your credit report and may affect your eligibility for a conventional loan. If you have existing debt, work to decrease it. If you can pay down your debt and lower your debt-to-income ratio, you may be able to get a much better mortgage rate. Avoid any additional debt until after the mortgage has completely closed.

Four: Recognize What You Can Afford

Sometimes borrowers get excited about really generous terms from a lender, only to find out later that they have over-extended themselves. As you consider how much a house payment will be, don’t forget to factor in your other expenses, including insurance, groceries, car maintenance and taxes.

Look Toward the Future

If you don’t qualify for a conventional loan right away, you can use these four tips to work toward a workable loan in the future. If you do qualify for a loan, work closely with a lender such as NLC Loans, use your positive credit history and score to your advantage. Maintain an attitude that will keep your interest rate low and protect your budget for the long run.

Weston Barnes is a writer and an avid reader. When he's not writing about business, marketing, health, pets, or relationships, he's immersed in his latest book.