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Be a Fit Borrower

Financial Freedom Series - Be a Fit Borrower

You may hope to snag a low mortgage rate, but have you done everything you can to make yourself an attractive borrower?

Mortgage rates nationwide for 30-year fixed-rate loans generally have hovered around 3.5 percent since August 2012. But as inticing as these rates are, only the best borrowers can quality for them, says J.J. Montanaro, a certified financial plannr with USAA. If you're thinking about buying a home, consider the following to help become mortgage-ready.

Be Realistic 

Gone are the days when banks would let you stretch unrealistically for a higher mortgage amount. He suggests spending less than 28 percent of your monthly gross income on a mortgage, including property taxes, insurance and homeowners fees.Get preapproved, but rememeber that what a bank may be willing to lend may be more than you should spend. 

Do Your Homework 

After verifying your income, your mortgage lender will want to know how much of a credit risk you are. Make sure there are no surprises in your credit report or credit score. A few months before applying for a mortgage, obtain both.

Tread Carefully

As you get ready for your home search, be careful about upsetting the apple cart. Keep up good spending and saving habits. "You should be focused on paying off debt and not applying for a new credit, which might drive your score down."