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Sep 18, 2008 2:02 pm US/Eastern
Angie's List: Home Financing
PHILADELPHIA (CBS 3) ―
The current housing crisis has made it more difficult to get a mortgage recently.
But it's not impossible. In this week's Angie's List report Jim Donovan explains what should know when before trying to finance a home.
Without a doubt it's harder to secure those big home loans today but as long as you have good credit, you should have no trouble becoming a homeowner.
The days of the quick and easy home loans are over, but you can still get an affordable mortgage.
"In fact, you'll have the opportunity to take advantage on some good deals on houses because there's extra inventory. But don't be surprised you'll likely be faced with more questions than normal when you're applying for your mortgage," said Angie Hicks, Founder of Angie's List.
Before seeking that mortgage, experts say you need to be aware of your credit status.
"I spoke with some highly-rated mortgage companies for advice on going about getting a mortgage and the first step they said to take was to pull your credit rating before you even talk to a mortgage company. Find out what your score is; see if you can do things to improve your credit, and keep in mind this might take six months to a year if you don't have great credit, but be patient and do your homework now," said Hicks.
Angie's List contacted its highly rated mortgage companies for tips on getting your credit in order before purchasing a home:
· Review your credit report to make sure all information is accurate
· Correct any inaccuracies by contacting the vendor
· Pay off any collections or liens you may have
· Pay your credit cards off and cut up the cards.
· Manage the money you have wisely by living within your budget
Angie's List offers 4 tips to help secure a mortgage loan once your credit is in good standing:
1. First, find a mortgage company that is local, trusted, and will spend one-on-one time with you.
2. Get pre-approved for your loan before you start looking for a house, which means you should have and be able to produce:
- Good credit
- At least three percent of the home's sell value for down payment
- Stable employment history
- Documentation of all of your assets
- A positive debt-to-income ratio
- Documents such as: last pay stub, W-2's and bank statements
3. Decide with your lender what type of loan will best suit your lifestyle. Ask yourself questions such as: Do you plan to live there for a long period of time? Do you anticipate your finances changing over the next few years? How long do you want to pay on your mortgage?
4. Have your mortgage broker write you a letter of prequalification only for the loan amount for which you have decided.
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