How to prepare yourself for a Mortgage

home finance home > Prepare Early to Get n Excellent Mortgage Loan The key is to establish and maintain you credit ByLauraSherman Don'tprocrastinate. Prepare earlyto get an excellent mortgage loan. Photo: iStock thinking about getting a home loan and want to prepare yourself ahead of time, there are some things that you can do before you even start house hunting. Take the time to improve your credit score If you have the income and assets necessary to purchase a home, but your credit is poor, you will not get a loan. Establishing and maintaining excellent credit is key. Take the time to improve your credit score as much as you can now. Make sure that you follow all the guidelines and tips for establishing and maintaining good credit. Be consistent and above all, make sure you are on time with every single payment. That is the most important factor. Make sure you have three good trade lines that have been open for at least a year Different lenders have different requirements about trade lines. Most will want you to have at least three active trade lines (like credit cards, student loans, etc.). They want to see that you can have debt and manage it well. If you only have one card, open two more now. Your credit score may go down a bit, but you will probably need to wait a year to establish some credit history, so it will adjust back up soon. Check with a loan officer to see what the current requirements are. It is possible that there are lenders that will allow you to get a home loan with less, but some may need four trade lines. Show a good rental history Always pay your rent on time each month. Lenders will ask for the last 12 months of cancelled checks if you are renting from a private landlord. Make sure they are all dated around the same time each month (the first of the month is standard). If you skip a month, lenders will treat it as a “mortgage late” and probably will not loan you money. Figure out how much house you can comfortably afford Determine what you can afford and stay within your means. It is important that you look for homes within your budget. If you know that you can afford $1500 a month, don’t even look at homes that will cost more. It is easy to get swept away by the excitement of a “dream home,” but in the end you will need to make the payments each month.