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PERSONAL FINANCE

Qualifying for a mortgage certainly is not as easy as it used to be. The turmoil that has gripped the housing and the credit markets has led to lenders tightening their approval standards.

But while it is more difficult to qualify, it’s not impossible. From www.people jam.com, an online self-help community, here are four tips to help you improve your chances of getting a mortgage:

Check your credit reports. The three main reporting agencies are Equifax, Experian and TransUnion. You’ll want to make sure that all the information on these reports is correct. If you find some information that is wrong, report the discrepancy immediately to all three reporting agencies. Anything negative on your credit report can hurt you, even if it’s not right.

Boost your FICO score. Most mortgage lenders use the FICO score to determine if a borrower will default. Because the score measures your ability to repay a loan, there are steps you can take to improve it. Pay down your debt, pay all your credit accounts on time and keep open accounts with a $0 balance.

Put money aside for a down payment. Sock enough away for a 5 percent to 10 percent down payment. This will show that you are serious about becoming a homeowner. Most lenders feel more comfortable granting a mortgage with a larger down payment. No-down-payment mortgages, a staple of the housing boom, have virtually disappeared. To qualify for a government-insured Federal Housing Administration loan, you’ll need to put at least 3 percent down.

Get realistic about your budget. Your mortgage payment should be about 25 percent of your monthly household income. Choose a price range that fits this. If you make $4,000 a month, don’t take a mortgage out for much more than $1,000 a month. This will ensure that you have adequate reserves to make your payments.

MarketWatch



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