Improving your chances of getting a mortgage loan

Don’t increase your monthly debt by making any major purchase. If you need a new car, buy the house first.

When you apply for a mortgage, lender looks at your "debt-to-income" ratio. That is, the lender compares your monthly earnings per month to your monthly payments -- on housing costs, credit cards, student loans, car payments, etc. This helps the lender to decide if you are ‘credit-worthy’ or a ‘credit-risk’.

Leave your money where it is until you talk to a loan officer. And don’t change banks.

Lenders may want to see statements for the last two or three months on checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, retirement accounts, etc. They may want a complete paper trail of all the withdrawals and deposits. To make it easier for the lender to validate your source of funds, don’t move your money around too much.

Wait till your life is settled in terms of place, job and personal life before you buy a house.

Go slow on buying a home is if you have just moved to a new place. Rent for a while before deciding on exactly where you want to live. It give you time to make a better decision. Or if there is uncertainty regarding your job, marriage, in the next few years, go slow on making another major financial risk by buying a house.

Plan on buying a house when the economy slows down and mortgage rates are down.

When the economy is sluggish, the supply of available houses is greater than the supply of buyers, prices of homes tend to be lower. It is then a buyer’s market. When the economy is down mortgage rates tend to be lower as well. This is the best time to buy a house.