Tips for Getting a Mortgage in 2009

January 8, 2009 By Tisha (Kulak) Tolar

As the nation ended the year with endless news about foreclosures and mortgage crisis galore, the new year is the perfect time to take stock of your financial situation and prepare for buying that house you want. It won’t happen overnight, but the new year will bring some changes to the real estate industry and you need to have your finances in order to be ready to find a deal.

Credit Scores of Old
A credit score of 720 used to be considered excellent to lenders but this is no longer the case. Many mortgage companies want to see a 740 or higher to feel confident in lending. As a result of the 2008 situation, most lenders have tightened their belts and have issue stiffer requirements than ever before. So it will be highly important you know where you stand credit-wise. Order your copy of your credit report today and find out what your score it. If it falls short of the 740 mark, start working towards paying down your debt and decreasing your debt to income ratio. Analyze your credit report for errors and report them immediately to the credit bureau. If the credit bureau can not ascertain that the mistake is legitimate, the correction could help to improve your score rather quickly.

Proof of Income
Not long ago, those applying for mortgages would go through the extensive application process and think there couldn’t possibly be any more paperwork to complete. However, now that lenders have upped the anty, applicants are required to do even more extensive work. For instance, it used to be good enough to state your income on the application. Now most lenders will also require solid proof of how much money you make. Applicants looking to breeze through a no-documentation loan may want to reconsider their option because loans with little or no documentation are very rare. Before applying with a lender, make sure you have copies of all your tax returns in recent years as well as copies of your pay stubs put in order. The last thing you want to have to do is scurry around looking for missing paperwork.

Other Records
In addition to your income, expect to provide other documentation during the application process. As your clear through 2008 documents for your upcoming taxes, you should keep a separate file to collect your bank statements, monthly bills you are paying on, and other relevant documents. If your debt to income ration is high, the lender may require some additional convincing.

Saving the Cash
As you pour over your finances and necessary documentation, you should also start putting away as much cash as possible for your down payment. Because improving your credit and getting your financial records in order takes time, you can focus on the renewed importance of saving as much as possible to get the house you’ve been dreaming about without too much hassle.

Posted in cars, credit score, debt, financial plans, income, lending, mortgages

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