Purchasing a home is one of the most important financial decisions you will ever make. It is a decision that you shouldn't take lightly. Research, investigation and shopping different mortgage rates and lenders should be number one on your list before you make any final decisions regarding your mortgage.



In order to get a good mortgage rate, terms, and a deal that fits your financial situation, you must have a decent financial environment. Your financial environment is a sum of all your financial dealings, such as income, expenses, both long term and short term debt, credit history, credit score, and of course assets. Together, all these things will affect the type of mortgage you will be able to qualify for.

The first thing you want to ask yourself when assessing yourself as a mortgage candidate, is do you have any repossessions, bankruptcies or foreclosures on your record? All these things are unfavorable to have in your financial environment and automatically make you a high risk applicant.

However, if these occurrences happened over seven years ago, and you have gone to great lengths to correct the situation, then perhaps you are in a more favorable position. It often takes about seven years or a little more for negative items to be wiped from your credit report.

If you have no bankruptcies, foreclosures or repossessions, then you are on your way to being a good mortgage candidate. If your credit score is above 600, then you are definitely a good mortgage candidate!

How is your income? Is it steady or does it fluctuate do to the type of work you are in, or are you constantly changing jobs? Good mortgage candidates have steady employment and income. The income amount does not need to be exceptionally high to be considered a good mortgage candidate. As long as it is steady, you are a good mortgage candidate.

How are your expenses? Are you constantly spending more than you make? Or do you put some money away every month? A good mortgage candidate has extra income every month and does not overspend. This leads into the next item, debt.

Are you up to your ears in debt? Do you have late payments and can barely pay the minimum amount every month? If you don't, then that is great! You should be up on your debt, paying it back on time every month, and not be so committed to creditors that all your money is going to a credit card or automobile payment every month.

Do you have a few assets such as investments in the stock market or business? Assets strengthen your case for a mortgage, as it shows a mortgage lender that you will be able to pay the monthly payment even when your cash may get low. If you do not have any investments, it's ok. It will not break your case for a mortgage. This house may be your first investment and that is definitely ok, everyone must start somewhere.

After asking yourself some of these questions, you should have a better idea as to how your financial environment looks. Your income does not have to be spectacular, just steady. You can have debt, as long as you can show you are paying it back regularly and on time. This is a positive aspect that a mortgage lender would look at when considering you for a loan.

If your expenses are a little on the high side, see what you can do to decrease your expenses every month. You can use that extra money to save for a down payment, and even get a better deal on your mortgage!

Interested in creating some assets for your self? Then consult a financial advisor who could point you in the right direction in taking some extra money and investing it in real estate or the stock market. This is a good thing regardless if you are buying a house or not.

If your financial environment is not looking so great based on this criteria, then take some steps to correct it. A little planning and self discipline can go a long way with your finances. If you are serious about purchasing a home, then consider fixing your personal finances before you shop for a mortgage. You will end up saving thousands of dollars in interest!