How to Qualify for a Home Mortgage Loan

Are you considering applying for a mortgage loan to purchase your first home? If so, you should read the following tips below that will make the process easier!

If You Have a Good Credit History It Is Easier To Qualify For a Mortgage

By far the easiest way to qualify for a home mortgage loan is by establishing a good credit history. To establish a good credit history you need to be able to demonstrate responsible repayment of smaller loans, such as credit cards and car loans. The building of your credit history begins the day that you put the very first debt into your own name. For many Americans, this is at the age of eighteen.

Having a good solid credit history, shows the home mortgage lender that you take financial responsibility seriously. This makes you, what the lender terms, a low risk borrower. That is to say that you as a borrowers are a relatively low risk in comparison to other borrowers.

In return for your good credit history, the lender will approve your home mortgage loan application. In addition, he will offer you a lower interest rate on the loan than would be offered to other borrowers who are classified as higher risk.

How Is Credit History Determined

Most people do not realize how pervasive and thorough the industry that accumulates and tracks individual credit histories is. There are three major credit repositories. They are: Experian, Equifax and Transunion. Among these three, they have a history on almost every person in the United States that has ever had a credit card, car, or mortgage loan.

A mortgage lender almost always orders a history from each of these repositories. This report is call a three bureau merged credit report or a tri-merged report. The word merged means that the bureau's consolidate the individual trade items in the report and eliminate duplicate items.

The lenders always order a credit score with the tri-merged report. Each bureau has its own score and the general name for the score is called a FICO or Fair Isaac score.

Most lenders make their loan decision based on the middle of the three FICO scores. Generally lenders use the following as guidelines for credit approval.

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