Getting a Real Estate Loan ImageThe process of getting a home loan has changed drastically since the turn of the economy. Whereas banks were before lending to potential disasters, they are now using strict guidelines before they approve financing.

Prepare for Loan Approval Obstacles

While this has helped to decrease the number of foreclosures, it has also increased the difficulty for first-time and credit-challenged homebuyers.

Before you fill out a loan application, you should be aware of these potential obstacles and prepare for them.

Review Your Own Credit Report

So how do you find out what challenges you will face? The first step is to review your own credit report. You can obtain a current copy once a year without being charged.

Request one from each of the credit bureaus and go over it carefully. If there are mistakes, begin the dispute process. If the complaints are legitimate, then set up a payment program to get them taken care of.

Check Your Account History

After this is done, then you have to make sure your financial standing is good. It’s important that your bank account is in good standing and you don’t have a history of being overdrawn, bad checks or anything else that would reflect negatively.

Maintain Consistent High Balance

A major portion of this is your balance. If this is low, then your loan officer will not see that you can afford the mortgage payment regularly.

It’s better if you leave a large amount of cash in your account for several months, so they can see a consistent high balance. Even if you have to take out a loan for this amount just to let it sit in your account, this will put one step further towards owning a home.

Of course, while it’s sitting there, it can be earning interest and this may help you make the monthly payments. Being smart about your money is very important when you’re trying to make a real estate purchase.

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This is filed under Home Buying.

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