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.
SCORE