Its just about the time to start considering the thought of getting back into the housing market. Moodys Economy.com stated of 381 large markets they have seen a 25% home value drop with an additional 11% left to go.



Ive been around this business for a long time and this sounds about right to me. I think we have about another year in the dull drums and then we can start the upswing again.





With that in mind it is at least time to lay the foundation of purchasing a home. Of course, when you purchase a home you may need a mortgage. When a lender evaluates you for a mortgage they will come to the conclusion about three things: If you credit qualify, how much loan you qualify for, and how much down payment the lender will require of you.



1. Credit: Most lending is based on the Fair Isaac scorning system. Your scores will range from about 400 up to 850. Naturally, the higher your scores the easier it will be to qualify. Pay your bills on time, keep a hand full of credit line open, and keep your balances low on the revolving credit. Your scores will soar.



2. Income Relative to Debt: This tells the lender how much to loan to you. They need to know you will repay them on a monthly basis of course. How much money you make along with your current debt load tells the lender the maximum amount to lend to you and still feel secure that you will make payments. Take your gross come and multiply by 38% to 41%. This is the amount most lenders will allow for a total debt (including house payment) load.



3. Liquid & Semi-liquid Assets: This goes to the lenders security. Perhaps when you first get your loan you have a great job and all is good. Then, low and behold, we have the unlikely event of a national or perhaps worldwide recession, and you lose your job. Your assets are the cushion to make the lender feel comfortable lending to you. The other part of this is how much money you will have for a down payment.



4. How You Earn Income: Some people get a salary and have been on the job for many years. These are the easy ones. Others, like myself, have never been on salary and have to prove earnings through tax returns. Others are 1099 contract employees, nurses, seasonal workers. The point is the lender will scrutinize income carefully. Look at your last two years tax returns if you are self employed, 1099, part-time, seasonal, or earn income in any sporadic manner. Thats what the lender will look at. They love to average these things.



Have a good year and keep your ear to the grindstone for good deals. I suspect there may be a few out there to be had to the diligent lookers.