Home Financing Tips for 2009

If you plan on buying a home in 2009, you will need to a get a home loan that you can affford and financing that you actually qualify for.  Gone are the days of everyone getting buying a new home with 80-20 down money down home loan programs. Good riddance, because those popular combination mortgages that were popular in 2005 and 2006 certainly played a major role in the current foreclosure crisis that is still dragging the economy down in 2009.

There are still home purchase loans available that require very little down. FHA recently amended there guidelines to require 3.5% down, rather than the 3% so many people became accustomed to with FHA loans. FHA mortgages require the borrower to pay mortgage insurance of 1.5% of the loan amount and .5% monthly, but that is tax deductible and borrowers who are only making a down-payment of 3.5% should not expect anything better. The mortgage rates are phenomenal as the Federal Reserve has cut interest rates to record low levels in an effort to revive the housing markets and our economy in general.

There are many home financing options and mortgage lenders are eager to earn your business. FHA remains flexible with credit scores as well, because there unique lending guidelines consider the “big picture” of the borrower rather than just a number from a credit score like most conventional lenders. To qualify for the best mortgage loans, applicants should pay close attention to the following tips and work with a mortgage lender that you trust to deliver the best possible loan for your specific needs.

Get Your Credit Report

Before applying for a home loan or searching for a lender, you should fully understand your credit score and clear up any derogatory comments being reported on your credit scores. If you have closed accounts that have been paid off, then request those finance companies update their records with Trans Union, Equifax and Experian. Even though FHA loans don’t focus on credit scores, most mortgage programs do and for whatever reason, you may not meet the FHA criteria for a new home loan any way. In most cases, credit scores have a significant impact on home loan program eligibility and ultimately how low your interest rate could be offered at. We recommend cleaning up your credit report, 6-12 months prior to shopping for a mortgage online.

Eliminate Monthly Costs

Debt to income ratio is one of the most important factors considered when underwriters approve or deny your loan application. By cutting your monthly expenses you will lower your debt to income ratio and maximize your chances of being approved. Try and get your debt to income ratio at or below 30% and you will have all sorts of home financing possibilities. Debt to income ratios can be calculated by dividing your monthly debt obligations by your gross monthly income.

If you can keep your credit good and your expenses low, you will ensure yourself the best opportunity to get a low interest rate with a mortgage that you can afford. The housing market should be near the bottom, so buying a home is a great opportunity to increase your wealth as the home equity will build quickly as our housing and economy rebound in the next few years. Please sumbit your comments and questions to me directly at Jason Cardiff Tips online.