Right now the real estate market may be hard for sellers, but the decline in home values is great news for buyers. For those who are in the market to purchase a home, there are some great deals out there. The tricky part, of course, will be financing that great deal once you have found it. Ever since the market dropped, banks have tightened up their lending standards to ensure that they don’t make the same mistakes once again. What this means for consumers is that yes, it is a great time to get a good deal on a home, but it is not an easy time to obtain a mortgage.
Before you get too attached to a particular home, it is best to get a good idea of your financing options. Obtain a free credit report and check your credit score. If your score is under 620 you will not be able to get a loan right now, and even with a score over 620 there are no guarantees. A score over 680 will actually give you the best chances of being approved for a mortgage.
Aside from a good credit score, you will need a positive employment record. If your income fluctuates, or starts and stops a lot, you may not be considered a good candidate for a mortgage. A solid employment history is absolutely necessary to ensuring you will be pre-qualified.
If you have solid income and a good credit score, then you will need to schedule an appointment with a mortgage specialist at a bank to discuss your options. This will help you find out how much a bank is willing to lend you, and how much you can expect to pay toward your mortgage each month. Keep in mind that you do not have to borrow the maximum amount quoted to you; you know your priorities better than the bank. If you’d rather not be saddled with a huge house payment and be unable to take vacations, eat out, or enjoy your hobbies, then you should stay well under the maximum mortgage amount offered to you.
Once you’ve been pre-approved, the fun part begins. Shopping for your new home can be exciting, and you’re sure to find a great deal right now.