It's no secret that the U.S. housing marketing is having one of its largest slumps since the early 1980s. Pick up a newspaper or turn on the news and you are inundated with a daily report of more foreclosures, people falling further behind on their payments and a general souring of the entire housing and mortgage market. However, even during this downturn there are those who are continuing to buy the home of their dreams and taking out mortgages to help finance that dream.

How can the savvy consumer make sure that they are not caught up in the mortgage crisis and not become just another statistic? By examining the type of house and mortgage you want to take out, as well as doing a little planning before you make the plunge, can mean all the difference in the world between making it or falling into the ever-widening black hole.

One of the reasons the mortgage industry is being hit so hard right now by defaults is that credit standards were relaxed to the point that many people who in a normal marketplace would not qualify for a mortgage were granted the loan. To their credit, some of these people are maintaining a stellar record and are on their way to owning their own house. Yet for many others they quickly got themselves into a situation where they could not financially afford the mortgage they were in thanks to adjustable interest rates and buying more house than they could afford.

One thing anyone who is looking into buying a house should ask themselves is how much house do they really need? Americans have tended to buy bigger and newer, which raises the cost of a typical house considerably, especially in areas where land prices are high. A mortgage company is not in the business of determining how much house you need - they are only looking at your financial ability to repay the mortgage.

Though you may be able to squeak by and get approved, how much is that larger house pushing you to the edge where one slip and you fall behind because you cannot afford it?

Of course, it goes without saying the better your credit the lower your interest rates. Even in times when lenders tighten their credit criteria for lending new loans you will always benefit by cleaning up your credit before you buy a house. Ever quarter of a point you can lower your interest rate can translate into tens of thousands of dollars of potential interest you do not have to pay.
Speaking of credit, make sure that you are putting down as much as you can possibly afford towards a down payment when you go to purchase a house.

The more you put down the less likely mortgage lenders are going to require that you buy insurance on the loan.

Typically, you should aim for between 10-15% of the home's value as a down payment. Again, for every dollar you put down towards the down payment on a house now, the less interest you will pay in the future - not to mention unnecessary insurance payments. Mortgage lenders want to see that you are serious about buying and paying for that house before they give you the best deals.

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