Serious about buying a home soon? Here is some clarifying information about just what it takes to qualify for a home loan:

How to Qualify for a Home Loan
Bank lenders use a number of criteria to determine whether or not to grant a home loan to an applicant.

Lenders look at your credit score. This is a number compiled by the three major credit bureaus to help lenders and other creditors determine the risk of loaning you money. Low credit score? A low credit score (below 600) can disqualify you from the vast majority of good home loan offers out there. Don't fret - there are lenders available who specialize in this type of loan. Do be aware that many of these low credit home loans require cash reserves and may come with steep interest rates and penalties for missed payments. Lenders look into the personal history of applicants. A lender may look not only at your income stream and earning history but also at your spouse's. Also, lenders will consider your cash and asset reserves. Lenders use sophisticated systems to determine levels of risk (and hence the amount of money they'll loan you).

Helpful Steps to Qualify

Save a substantial amount to invest in your down payment. Putting money down on your house will not only show good faith to a lender but will also reduce the total cost of your home long term. Get pre-qualified to get a ballpark figure for what lenders are willing to loan you. Do research both on your own (for example, over the Internet) and with the help of your broker (we hope that is us) before you start contacting lenders. Get creative with your financing approaches, but ground your budget in a conservative reality. Experts say that homeowners should generally spend less than 30% of their monthly income on mortgage and property payments.

Determine Your Credit Status
Your credit report and score (which are primarily based on your loan paying credit/debt history) are used to make decisions about loans and interest rates available to you. As a key component in evaluating you as a credit risk, lenders use this information to see if you have missed payments, carry high balances, or are in other ways over-extending yourself financially. It's a good idea to check your credit report to make sure inaccuracies aren't impacting your credit. We suggest you begin the process by obtaining your credit report http://www.annualcreditreport.com with this free and easy way to check your credit. Learn more about your credit.

Curious about what establishes your credit status? The following categories can be used as a general guideline in evaluating your own creditworthiness (please note that these are general guidelines only-other factors will often be included in the loan approval or credit evaluation process):

Excellent Credit

Credit scores of 720 and above (Rate Search will use 740, rates vary within this category) At least 5 trade credit lines (credit cards, auto loans, mortgages) have each been open for at least 24 months All accounts have been paid as agreed No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 10 years Low current credit balance relative to maximum available credit limit Minimum number of credit inquiries

Very Good Credit

Credit scores between 680-719 (Rate search will use 700, rates vary within this category) At least 5 trade credit lines (credit cards, auto loans, mortgages) have each been open for at least 24 months All accounts have been paid as agreed No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 7 years Low current credit balance relative to maximum available credit limit Minimum number of credit inquiries

Good Credit

Credit scores between 620-679 (Rate search will use 660, rates vary within this category) At least 5 trade credit lines (credit cards, auto loans, mortgages) have each been open for at least 24 months Most accounts have been paid as agreed, with only occasional late payments No public records of bankruptcy, foreclosure, serious past due accounts, or collections within the last 10 years May have significant current credit balance relative to maximum available credit limit Several recent credit inquiries

Fair Credit

Credit scores between 580-619 (Rate search will use 600, rates vary within this category) At least 3 trade credit lines (credit cards, auto loans, mortgages) have each been open for at least 24 months Most accounts have been paid as agreed, with only occasional late payments No public record of bankruptcy, foreclosure, serious past due accounts, or collections within the last few years May have significant credit balance relative to maximum available credit limit Several recent credit inquiries

Poor Credit

Credit scores 579 and below (Rate search will use 560, rates vary within this category) One or more accounts have not been paid as agreed May have had a bankruptcy, foreclosure, serious past due accounts or collections High number of recent credit inquiries Proportion of revolving balances to revolving credit limits is too high

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This country is great. It's the only place where you can borrow money for a downpayment, get a 1st and 2nd
mortgage and call yourself a homeowner.