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Planning for Home Loan Approval

Many first-time home buyers are so caught up in the fantasy of the American Dream or the excitement of choosing their new home that they forget a very crucial part of the home buying process: mortgage approval. In order for you to pay for your home, you will need a mortgage. In order for you to receive a mortgage, you will need to apply and be approved or accepted by a lender.

While there are many more home finance options today than twenty or thirty years ago, it is still much easier to purchase a regular mortgage and not deal with all of the complications and extra stipulations of alternative mortgages. If you have good credit and a somewhat reliable income, you will probably be approved by a lender.

Some mortgage companies are stricter than others, but in general they all look for the same thing. They don�t want to see debt on your record, they don�t want to see outstanding balances on other credit cards you have, and they don�t want to see missing or suspicious information that makes them wonder if they can rely on you to pay back the loan you are requesting.

In order to ensure that you will have a promising mortgage application with all of the desirable qualifications and requirements that lenders look for, you may want to take some steps early on in your financial life.

One way to acquire good credit is to use credit cards. The key here is that you use them�not abuse them! The more credit cards that you have (and continue to pay the balances on) the better credit you will have. This does not mean you should go sign up for every credit card. You probably just want one to three cards, but make sure that you maintain good credit with the cards you do have.

Make sure you only charge what you can afford. Keep track of your purchases and do not allow yourself to put off payments or go into debt. If a lender sees that you have had credit in the past and been able to pay it all off, they are also likely to trust you with their loan.

Make sure you have a steady job. If a lender sees that you change companies a lot, or even change career fields, they may be uneasy about giving you a loan. It�s all about stability and security. Like in a custody battle over children, the parent who seems better off to be a parent is usually the �fit� one, i.e., the one with the safest, secure and stable lifestyle. It is the same with mortgage lending. The loan is the child. The lender only wants to give their �child� to a �fit parent.�

Lastly, put some money into savings. You don�t have to spend all you have. Perhaps you should decide on a certain amount to put away each month or each paycheck, and plan to use it as the down payment on your first (or next) home. This will save you a lot of financial stress later, and this will also show a lender that you are a frugal and responsible home buyer who can be counted on to pay back a home loan.

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