Scoring a Mortgage in Turbulent Times

by Stacy Francis, CFP®, CDFA

“For years,” a woman said during a recent telephone conference, “I was waiting for the real estate bubble to burst so that I could buy something. Now that it finally has, no one can get a mortgage.”

While it is true that it is much more difficult to score a mortgage today than, say, two years ago, it is still far from impossible. My husband and I just got a mortgage 3 months ago. Here are three things you can do to increase your chances:

  1. Work on your credit score and history. If you have a stellar credit score and a flawless history, you’re halfway there. And even if you’ve had a few hiccups in the past, paying down your balances and making your payments on time will greatly increase your chances.
  2. Don’t ask for a larger mortgage than you can afford. Banks are very wary of this problem right now. If your household income is, say, $6,000 per month before taxes, don’t ask for a mortgage where the interest alone will cost you $5,000 per month. Be realistic, and banks will think higher of you.
  3. Make a down payment. Not only will doing so make the amount you need to borrow smaller, but it also shows the lending institution that your finances are sound and that you are ready to be a house owner. We actuallyput down a 25% down payment making our monthly mortgage more manageable.

So while I won’t disagree that first time home buyers will have a harder time making their dream come true today, there is certainly hope. After all, many houses do sell even in today’s market – and so someone must be buying them. If you follow these easy guidelines, you may very well be next one.



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