See Yourself as a Lender Will

Clue: They Don’t Wear Pink Glasses. Be prepared.

Know Your Business

When dealing with lenders, you have to be organized.

You can save yourself a lot of wasted time and energy if you learn to look at yourself as a lender would.

Lenders will look at two basic numbers in deciding how much you can afford to borrow. Keep in mind: Once you know how much you can borrow you'll also know the price range of houses to look at.

What a Lender Inspects

This is where the paper pile begins!

1. Your monthly housing costs, which include mortgage payment, taxes, and insurance; and,
2. Your total debt, which includes monthly housing costs - plus any long-term debts like a student loan, car loan, credit cards or other installment debt.

Understand Basic Borrower Guidelines

They aren't too difficult...

The lending guideline is that you should spend no more than 28% of your monthly gross income (before taxes) on housing expense. That can include business income, disability or retirement benefits, alimony, child support, etc.

Also, your total monthly debt payment, including housing and other long-term debts, should be no higher than 36% of your monthly gross income.

Check Your Credit Rating

This is essential!

A good credit report is an important part of your financial profile. Before you begin the process of applying for a mortgage loan be sure that you review your most recent credit report.

Be certain all of the information included in it is accurate.

Errors or misinformation in your credit history could have a negative impact on your chances for the best loan and interest rate.

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