Will it Ever Get Easier to Get a Mortgage?

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The mortgage game has been tighter since the Great Recession hit in 2008. Banks are skittish about lending, even though recent months have seen improvements in the overall financial picture.

Typically, Fannie Mae and Freddie Mac have offered home mortgages to borrowers who may not meet qualifications at traditional banks. In the past, banks would repurchase those loans, but now, lenders are hesitant to take a chance on loans and borrowers that don't meet their standards.

Remember the subprime mortgage crisis that began in 2007? Lenders were giving out loans to borrowers who would not otherwise qualify for a traditional mortgage, and then everything fell apart when the recession hit: Housing prices dropped, spending slowed, defaults and foreclosures soared.

Federal housing-finance regulators are trying to expand lending now by enlarging access to home loans, but lenders are not being quick to jump on that bandwagon.

That's not good news for the family struggling to get a mortgage for that dream house. What can you do to make it a little easier to get approved for that mortgage?

Reduce Your Debt

Lenders want to see that you are not overburdened by debt. Now is the time to start reducing the current debt you have. When you take on a mortgage, you add a large payment to your budget and lenders want to be assured that you can handle that extra debt. The less current debt you have, the better it will be for you when you apply for that home loan.

Improve Your Credit Score

Start working to up your credit score. Make your payments on time, reduce your credit card balances, and in general, show potential lenders that you handle your finances in a responsible manner.

Save Your Money

You will need a sizable down payment for a home. Save up every penny you can now to have that money put back. A lender will want to know that you can make the required down payment (and then some if possible) before they will be willing to take a risk on loaning you money.

Start now with strategies to get your finances in order. Work toward improving your credit score, your debts, and your savings so you can show a potential lender that you are worth the risk.

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