The first thing to do is to plan your purchase while keeping and building the following key points:
Your Credit Profile
Your Character as a borrower
Your financial Capacity
Let me take a few minutes to explain:
The above mentioned key points are crucial to every financial institution who offer to lend the largest personal loan in your life.
Your Credit Profile
Lenders want to see someone who has built a good credit profile; which shows a history of your past credit, any judgments against you, the amount of credit that is available and uses this information to calculate the Total Debt Ratio (TDS).
In your credit report it will also show your personal wiliness to repay your debts, which translates to the degree of integrity you may uphold as a personal value. It also shows if you are a stable person; looking at how many times you have relocated in the last few years and how long you hold a job. They would love to hear that the borrower has taken the time to plan and save a sizable down payment, which shows good intent.
Your Financial Capacity
The financial institution will look at your salary/income, your debts and will take into consideration if you have to pay alimony, child support or even how many dependents you may have in your charge, to evaluate if your salary can cover all your family/life financial needs and whether or not purchasing a house is a good fit for you.
Your capital is the down payment you have set aside/saved to put toward the purchase of your house. The financial institution will want to see how you came up with this down payment; did you budget for x numbers of years and put aside x amount of money to build this down payment or did you received a gift from your parents or maybe you won the lottery. However you accumulated the down payment, it will be essential to provide proof of your claim with print out of bank statement and any other documents to support the origin of the money.
Here the lender will look at the type of property you wish to buy, the location of that property will be important because that will affect it’s marketability (that's how easy the property will resell if they end up having to reclaim the property).
Planning to purchase a house is very important. If you follow the steps below, you will be ahead of the game and have the ability to take advantage of better interest rates, lower mortgage payments, be able to borrow a little bit more than the average Joe and have a mortgage burning party within 10 years, saving you a BUNDLE of money in the process.
Here is the plan, (you are only 5 steps away from acquiring your house):
1. Build your credit profile
Attend my webinar on this subject, I will demonstrate how a credit profile is evaluated by the credit bureau, how to build a great credit score, and how to maintain your score and more. Click here to register
2. Find a job that you like or love, in the industry that motivates you.
To show stability, it’s a very good practice to find a job, get promoted from time to time, and stay with the same employer for a minimum of 3 years at a time. If you decide to change employers, try to stay within the same industry and hopefully moving onto a better position with a pay raise.
Voilà, once you find a great home and your offer is accepted we will work together to provide the lender with all the documents necessary to finalize the release of the funds to the lawyer a few days before the closing date, making this transaction as smooth as possible!
3. Set your goals and timeline
This one might be tricky to do on your own, since you will not know how much you can afford and how long it will take to save the down payment necessary. Set up an appointment with me to discuss, click here to set up an appointment.
4. Set up your budget to save your down payment
I have a great tool that will assist you with setting up a budget. In less than 10 minutes per week you can have an updated budget, keep track of your expenses, build your savings and manage your debts.
5. Get Pre-Approved
Once you have the down payment, we will work together to secure a pre-approval from our financial institution(s) so that you can start shopping for your home and place an offer without the financing clause on the contract. Having a pre-approval will strengthen your offer as it is a confirmation that you have qualified for a mortgage.
You may want to familiarize yourself withthe following terms: