In today’s economy; getting a home loan isn’t an easy task.  Just a few years ago, even those that had experienced the worse of credit circumstances were gifted with a loan for their first home.

Today, the economy is sliding down a slippery hill and even the government is stepping in to help control the rains.  For those wishing to purchase their first home in these hard-hit times; there are a couple of important factors that you might want to know prior to entering the doors of any bank or mortgage company.

First and foremost; you must know your credit history.  If your history is full of blunders and mistakes that you suffered in earlier years; you may want to write the credit bureaus and explain these circumstances.  Generally, these credit bureaus will add personal statements to their reports for loan officers to read.  If you have no credit history; you may think that is a good thing- but in reality, it’s not.  No credit history means you have never owed anyone; therefore, loan officers are unsure if you are a good risk.  Will you pay them back?

The best scenario for person’s in this circumstance- open up a low interest credit card, pursue a small personal loan; anything to build history on your credit report of on-going commitments paid.  Another important note, keep a small amount on the credit card or loan; don’t just charge something and pay it off.  The idea is to create a long standing history of loan versus payment.  It sounds awkward and even far-fetched but its how the financial system works.

The second most important information that you will need to have ahead of time is your income to debt ratio.  This simple percentage is simply figured by taking your income and dividing it by your debt.  In most situations, banks feel that your income/debt ratio should never exceed 40%.  In today’s hard hit times, they may even push for a 35% income/debt ratio.  The simple solution to keep your income/debt ratio on a positive note is done one of two ways; you can eliminate debt or increase your income.
Long term employment is an important factor that is looked at when applying for a home loan, as well.  Banks want customers that have established roots and those start with a secure and financially stable career.

Other factors that you want to consider prior to visiting a bank or financial institution revolve more upon the property you will be buying.  How much do you plan on spending?  What type of down payment will you be putting down on the home?  Is the home worth the asking price?  Has the home been appraised?  As well, you will probably want to ask the bank or financial institution about important fees; some must even be paid prior to applying for a loan.

A first time homeowner should always weigh their options; look at low interest fixed rates, search for banks and financial institutions that waive up-front fees, and even charge 0 points for those wishing to use their services.  This is your first major purchase; you should never rush into any agreement.  Do your homework and keep an open mind.