Making yourself presentable

When describing what makes a person an "attractive buyer" for consideration for a home loan, we're not referring to facial features and body types.

We're talking about aspects of someone's financial history that will make him or her eligible to buy a home.

Despite the considerable increase in the average price of a home in the United States, buying a home today is more accessible than ever.

In the year 2002, the ceiling for a Freddie Mac or Fannie Mae loan in the United States was $300,700, with a 7.16 percent interest rate.

Today, the country's loan ceiling for a home is higher at $322,700 but interest rates have plunged to 5.875 percent.

What does all this mean? Well, that means that even though home prices, and subsequently loan amounts have increased, the total interest one pays on those homes may be less.

Last year's $300,700 loan, for example, yields a monthly mortgage of $2,039.

A loan this year for $322,700, because of the lower interest rate, could require an even lower monthly mortgage of $1,909.

That translates into good investment sense for buying real estate.

But, where does one begin? A good place to start is by preening yourself into an "attractive buyer" or prime candidate for a loan, and here's how:

Step 1.

Assess your income.

Applying for a loan is obviously easier with a higher income.

Lenders' rule of thumb is an allowance of 38 percent of gross income to go towards a mortgage payment.

For example, if a loan calls for a $2,200 monthly mortgage payment, be prepared to gross more than $6,600 each month.

(And remember, if your income falls short of that, there are ways to work around that based on your debts, assets and credit report.)

Step 2.

How much money can you put down? Typically, a home loan requires a 20 percent down payment, but can run as low as zero percent, depending on the type of loan for which you qualify.

Something to consider: By putting 20 percent down, you are exempt from the costly mortgage insurance payment each month.

And, your overall monthly mortgage payment is lower.

Step 3.What are your assets? Aside from income, what else can you show a lender that proves your worth for buying a home? Some areas to include are stock investments, including 401K plans and mutual funds.

Also, do you own your car? All this is factored in when applying for a loan.

Step 4.

What is your income-to-debt ratio? In general, red flags are raised if more than 44 percent of your income goes towards total housing costs plus paying off debts.

Perhaps you have a heaping college loan yet to be paid, or credit card debts looming.

These need to be adequately managed in order to obtain a loan.

Step 5.

How's your credit rating? Speaking of adequately managing your debts, a credit rating score determines just that.

Showing some debt is in fact a necessity for securing a loan.

Lenders want to see that you are responsible when it comes to borrowing money, and typically look for three lines of credit such as a car loan and two credit cards being paid off in a timely fashion.

Experian, Equifax and Trans Union are three major credit reporting agencies to turn to, and if your rating is less than stellar, there are steps you can take to clean up your credit.

With these essentials covered, go apply for a pre-approved loan and begin your hunt for the house of your dreams.

Robin Cullen represents the Tahoe City office for Lake Tahoe Mortgage Corp., an office which she also helped open in 1998.

She boasts more than 20 years experience in real estate, aiding in the transaction of 1,000 properties, and counting.