Atlanta Homebuyers Learn Secret to Qualifying For a Mortgage Amid Tightening Credit

Lenders can't seem to make up their minds. One day they're handing out subprime mortgages like candy. The next, it seems you need to be a saint to qualify for a loan.

Well, maybe not a saint. But you do need to have a credit score and finances that put you in the top third of borrowers, say Atlanta bankruptcy attorneys. That's right, statistics show that just one out of every three people who apply for a mortgage this season will be approved, according to Wallet Pop. Banks learned the hard way that lending to those of us with not-so-stellar credit can lead to defaults and foreclosures. Today, they're not taking any chances. But there are steps you can take to improve your own chances.

What's the No. 1 reason banks cite for turning down an applicant? Bad credit. You'll need a credit score of at least 680, and preferably higher, to qualify for an affordable mortgage. That's the bad news. The good news? You have the power the raise your score.

Your first move should be to find out what your score is in the first place. That means requesting your annual free credit report from the three major credit bureaus so you can go over your credit history and get any errors cleaned up. The simple act of cleaning up your credit report, from getting rid of accounts that no longer exist to clearing up incorrect personal information, can boost your score.

Next you need to get a handle on your debt. This isn't the time to be buying that new car or applying for a new credit card. Lenders want to see that you're making a conscious effort to prepare for making house payments, and piling on the debt does just the opposite. Refraining from making any big purchases or changes in coming months can also help you stabilize your credit.

Now for lowering that debt. The less debt you have, the more likely you are to make your mortgage payments - at least, that's what lenders hope. So that car payment, those student loans, and those credit card bills? They all eat into your paycheck - and raise a red flag for banks. Ideally, lenders want your mortgage payment to be less than 30 percent of your income. By reducing debts, you theoretically free up fresh money for making house payments.

Of course, lowering debt is always easier said than done. And that's where bankruptcy comes in. If you can barely afford to handle your minimum payment, chances are you're not going to be able to reduce your balance anytime soon. With bankruptcy, you'll often find an affordable payment plan - and in some cases, a way to discharge debt completely. If you can't seem to find that fresh start, filing for bankruptcy may be the solution you're looking for.

Find out for free if bankruptcy can clean up your credit, relieve your debt and get you into the house of your dreams when you try a complimentary personal debt analysis with one of our professional Atlanta bankruptcy attorneys.

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