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Want To Buy A Home? Tips Before You Apply

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It is the American dream for many to come home to a place that you own, but it's important to know you are ready for home loans. If you are considering applying for a home loan with a local or online mortgage company, there are some things that you can do in advance, to see if you are going to meet the requirements.

There are different qualifications and expectations from the mortgage companies, and they want to know you are going to pay them back each month. Here is what you should do before you talk with a loan officer, and before you let them pull your credit score:

Look at Your Free Credit Report

You are allowed to get one free credit report a year from all of the different credit bureaus. Get your reports, and go through them to see what things are bringing down your credit score, and to see if you have any problems. If you can see you have been paying a credit card or utility bill late, make sure you make the effort to get everything in on time.

You have to show the loan company that you are going to be responsible with your home mortgage, and this starts by managing the debt and bills you already have.

Calculate Your Debt to Income Ratio

What percentage of debt do you have, in comparison to your income? If you have more than 30 percent, you may have a hard time getting approved for a loan. Try to pay the amount due on some credit cards, or get rid of some medical bills if you can, to get this number as low as possible before you fill out a mortgage application.

Start Saving

There are a lot of fees when you purchase a home, and you are going to need money for a down payment, private mortgage insurance, title processing, home insurance and more. Start saving as much as you can, and put the money in a separate banking account. You may even want to save the amount of an estimated mortgage each month, so you can see what potential payment you could afford.

Check Out Loan Options

Depending on your credit and your current amount if income, you are going to want to look at 30 years fixed rate mortgages, and 15 year fixed rate mortgages. Avoid an adjustable rate mortgage, and look at an FHA home loan if you think you may have problems getting approved.

Buying is something that anyone can do if they are financially prepared. Take the time to align your finances, and then fill out an application to make your dream come true.