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Financing Mortgage Loan - Ways to Make Financing A Mortgage Loan Easier in Today's Tough Lending Market

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The rules of mortgage loan finance have changed a lot in the last couple of years, so if you’re planning to buy a home, you may want to bone up on your strategy.

Are you considering looking into loan mortgage financing? Do you know what it is going to take for you to get that financing you seek so you can buy a home? The struggling economy and recent foreclosures and need for home loan modifications has forced major lenders to take a new look at the way they do business and this could affect you in some serious ways. The good news is that you can still get the financing you seek, but it might be a little tougher if you don’t meet the new criteria.

Credit scores need to be higher than ever
In the past, a person could get the loan mortgage finance they sought at a decent rate with a credit score of about 680 or so and if they were going for an FHA home loan, it was even possible to go as low as about 620 and still get an acceptable interest rate. Lending expectations have increased in recent years and this puts more pressure on the buyer to be able to prove that they are worthy of the financing they seek.

This means that scores now have to be higher to even be considered for a mortgage. You can help to keep your credit score up by making sure to have a strong payment history on your trade line accounts and lower your balances. You should be using no more than 30% of your available credit and if you can go lower, that’s even better.

It also helps to make sure that you are making payments on other accounts, as well. An auto loan, for instance, can have a major impact on your credit score when on time payments can be recorded. If you have a mortgage at the moment, it’s essential that you be making all of your monthly payments on time.

Before you decide that you want to finance a mortgage loan, it’s a good idea to check your credit report and try to get rid of any negative accounts which might be dropping your score. Make sure to keep the account if most of the history is good, though, because a person who has 20 years of credit history looks better than a person who has two years. See if you can negotiate with your creditors to remove those late pays that happened last year if you’ve been doing a good job making your payments for a while, but keep the account on your credit report.

Also, make sure that you don’t close any existing credit accounts becasue this can look bad on paper. Keep your accounts open, active and in good standing for the best credit score.

Consider the type of home loan you’re seeking
There are still different kinds of mortgage loan finance that you might be able to get, especially if your credit is good. This is a wonderful thing for people who currently have a home loan and are debating whether to add on or to move to a new home. In this case, if your mortgage is in good standing and you have a decent amount of equity in your home, it might be a good idea to stay where you are and consider adding on. For big projects, you may find that adding a line of credit to your home loan is a good way to finance the addition and if you work with your existing lender, you might be able to get a good deal on this type of financing.

Down payments count
In the past, it was relatively easy to secure financing for a mortgage loan with 0 to 5% down. For FHA loans, you might have gotten away with as little as 3% down on your home. Now, however, lenders of traditional loans are expecting that you put as much as 20% down in most cases and even in the case of a good FHA home loan, you might find that you’re expected to have about 5% down. Buyers shouldn’t get discouraged, though, because if your credit score is high enough, lenders are a little more willing to work with what you have.

When you know the new rules of loan mortgage finance, you’ll find that the process is easier to navigate so you can get the financing you seek with little or no hassle at all.

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