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How to get approvedfor a mortgage
Real estate professionals say themarket is rebounding, and manywould-be home buyers are eager-ly awaiting their opportunities to purchase their own homes. Freshdata indicates that the inventoryof properties is quickly drying upand soon the market is poised to point in the sellers’ favor.According to Allen & Associ-ates, a real estate appraisal, con-
sultant and research rm based in
Colorado, properties in the arealisted for sale are below the six-month supply of inventory. Nowcould be the time to get a gooddeal on a home, provided buyersare able to secure mortgages. No matter how many afford-able homes are available, if a buyer cannot get approved for amortgage, then his or her chancesof owning a home are slim. In thewake of a tumultuous economy,many lenders tightened restric-tions on mortgage lending. Andeven though the economy hasrebounded, many lenders havecontinued to follow strict guide-lines before lending money. Inorder to secure a mortgage witha good interest rate, buyers must
take control of their nancialsituations and x problems that
could lead to loan rejection.Many things can impact amortgage application. Here arethe ways to overcome liabilitiesand improve your standing with prospective lenders.
Know your credit rating.
Your credit rating is a scorethat lenders rely on when decid-ing whether or not to approveyour mortgage application. Thehigher the credit rating, the moreattractive you look to prospectivelenders. But the lower your score
is, the more difculty you will
have getting a loan. Should youget a loan with a low score, youmay have to pay a higher interestrate than someone with better credit. Prior to making any big
nancial decisions, such as ap
- plying for a mortgage, it is vital
to nd out your credit score. You
can request a free copy of your credit report, which includes your credit score, once a year fromthe three major credit reportingagencies in the United States andCanada: TransUnion, Experianand Equifax. You also can pay for your credit report.
Address any issues onyour report.
Once you know your score,you can take steps to addressany issues on the report. Paydown revolving consumer debts,such as credit card balances andauto loans. Report any errors onyour credit report so they can beadjusted. Pay bills on time andaddress any notices of collections before they make it onto your permanent record. If you will beapplying for a loan soon, avoidopening any other credit ac-counts for the time being.
Having a job is often vital togetting a mortgage. Lenders tend
to look for long-term nancial
stability, which is best illustrated by maintaining steady employ-ment. Jumping from job to job
may be a red ag to lenders, so
it’s better to make a switch after you have been approved for aloan.
Save, save, save.
Having more money in the bank lowers your loan-to-valueratio, or LTV. This will makeyou appear less risky to lenders.Individuals who have saved for aconsiderable down payment ona home are also seen in a better light.
Make sure you have acredit history.
Some people are too cautiouswith their credit and think clos-ing accounts or avoiding creditentirely will make them moreattractive to lenders. But this can
backre. Lenders will want to
see a strong credit history thatindicates your ability to pay your debts on time.
Get a cosigner.
If you are uncertain about your ability to secure a loan on your own, then consider a cosigner to make you more attractive to prospective lenders. The cosigner helps guarantee the lender thatyour mortgage payments will bemade.
How homeowners can reducetheir monthly expenses
Saving money is a prior-ity for many people. Butreducing monthly expensesis typically a bigger concernfor homeowners, especiallynew homeowners adjust-ing to life with a mortgage,higher energy bills than theylikely had while renting andother costs associated withowning their own homes.Home ownership is adream for many people, butthe realization of just howexpensive owning a homecan be is often eye-openingonce you get the keys andmove in. Once the initialsticker shock has worn off,homeowners should knowthat the cost of home owner-ship need not be so steep. Infact, there are several wayshomeowners can cut costswithout drastically changingtheir lifestyle.
Combine yourinsurance coverages.
Many lenders mandatethat borrowers carry home-owners insurance for their homes. The cost of cover-age varies from companyto company, and one of the ways homeowners canreduce the cost of their homeowners insurance isto bundle their homeown-ers coverage with their autoinsurance. Some companies provide discounted premi-ums as high as 15 percentfor policy holders whocombine their homeownersand auto insurance cover-age. Speak with your cur-rent provider to determineif combining your coveragecould save you money. If the
savings are not signicant,
shop around for an insurancecompany that can offer youthe lower price you desire.Just be sure the company isaccessible and reputable.
Renancing your mort
-gage is another great wayhomeowners can save a sub-stantial amount of money.Even if you only recently purchased your home, your lender might be willing to
renance your mortgage
with a lower interest rate.Depending on the amount of time and money left on your loan, reducing your interestrate by 2 percent can saveyou a substantial amountof money on your monthlymortgage payment, whichcan add up to considerablesavings on the total interestyou will pay over the life of the loan. If you think your interest rate is a tad toohigh, consult your lender
and discuss renancing at a
Bundle your services.
More and more consumershave decided to bundle their Internet, phone and televi-sion packages. Consumer Reports found that bundling just two of those servicesinstead of buying them fromseparate providers can saveconsumers between 40 to 60 percent depending on wherethey live. Rates for bundling packages often come withan expiration date, but aConsumer Reports surveyfound that even those pack-ages come with some wiggleroom. In their 2011 AnnualTelecom Survey, Consumer Reports found that one-thirdof survey participants at-tempted to negotiate a lower rate for their bundled servic-es, and 90 percent of thoseefforts were successful.When negotiating, discusslower prices for bundlingas well as extending the package beyond the currentexpiration date.It never hurtsto ask, and one study has al-ready shown that it actuallyhelps to ask.
Going green benets the
environment, and it’s almost
certain to benet homeown
-ers’ wallets. According tothe U.S. Environmental Pro-tection Agency, toilets ac-count for more water usagein the home than any other
appliance or xture. But the
EPA also notes that a familyof four can save thousandsof dollars by switching to a
high-efciency toilet over
that toilet’s lifetime. Andinstalling eco-friendly ap-
pliances or xtures around
your home might even makeyou eligible for certain tax breaks while also updatingyour home, something thatwill make the home moreattractive to prospective buyers when you sell downthe road. There are manyways to make a home moreenvironmentally friendly,and nearly all of them cansave you money over thelong run.
Refnancing an existing mortgage is one way homeowners can reduce their monthly expenses.
Sunday, May 5, 2013