Six Tips to Getting the Mortgage You Want


Now is the best time to purchase a home. Interest rates are at a historic low, and housing prices in many markets have adjusted to levels that have not been seen in years.

But before you start your property search or drive around neighborhoods looking at every house with a "For Sale" sign in the yard, you''''ll need some information. In particular, you''''ll need to know how much house you can afford and get preapproved for a home mortgage.

There are six things you can do right now to help you enter the preapproval process:

Get Advice
Seek out a trusted real estate professional first. An agent who understands your needs and circumstances and who will work within your budget.

Understand Your Income and Debt Ratios
Today it''''s more vital than ever to consider your income and debt ratios. A good rule to follow for your monthly housing payment is principal, interest, taxes, and insurance (PITI), which should not exceed 28 percent of your total monthly gross income.

By knowing your optimum monthly payment and how much of your savings you want to use for a down payment, a skilled real estate professional can determine approximately how much house you can buy. Be ready to supply some basic income and debt information to your agent and be honest with the payment you feel you can realistically afford. Just because you may eventually qualify for a higher monthly payment doesn''''t mean you should put your family''''s finances in jeopardy by stretching your budget.

Ask for a Lender Recommendation
Ask your real estate agent to recommend a mortgage professional who has given clients excellent service in the past. Find one who will work within your comfort level.

Be Prepared with Financial Information
When you sit down with the lender, have your two most recent bank statements, pay stubs for the most recent month, and your W-2 forms and tax returns for the last two years available. The lender will run a credit check and review your income and debt information and your credit scores with you.

Plan Ahead
If buying a house involves a higher payment than you''''re currently making in rent or mortgage payments, take the difference between the current and proposed monthly payments and put it in a separate "house" account. At the end of several months, two things will have happened: First, you''''ll have trained yourself to make the higher monthly payment and second, you''''ll have grown the savings account for your home purchase.

Find homes for sale in your desired neighborhoods.