Buying your first home – do you have the money? Mortgages and Real Estate
How much have you got?
how much have you really got? No, that’s not a silly question, all too often
buyers discover to their frustration that their real worth is considerably less
than they thought.
Why? Well, here goes –
you have a credit card? If so, whatever your card limit, whether or not you
have a debt on the card, even a small one – deduct the total card limit in $
from your capital. If you have more than one card, deduct each card’s limit
from your capital.
you have a personal loan? Are you purchasing your car with finance? Do you have
any other regular debt? If you do, deduct the amount of all debt from your
Still looking good? Great!
you been in regular work for 12 months? Then get your pay slips ready. Can you
show a savings record with the bank or lending institution you plan to obtain a
housing loan from? Are you self-employed and, if so, can you show tax returns
for the previous 3 years?
a broker for pre-approved finance is your next step so, armed with every scrap
of detail about your financial position, make an appointment. Under no
circumstances try to conceal debt from your broker. It’s such a waste of time
and the disappointment is immense when you find the house of your dreams and
have an offer accepted only to have the whole thing fall over because you
forgot to mention that other credit card you have stowed away and the bank or
mortgage insurer rejects your application. A good broker will poke around your
finances until all is revealed, put your application together and submit it to
the Lending Institution of choice.
Now, your pre-approval will have some real
value and you can go shopping.
Even though the pre-approval will do wonders for your confidence it will still
take 28 days for your loan to be unconditionally approved by the bank so,
please, don’t feel offended when the real estate agent insists on that time
frame. You and your finances may be in great shape but at this time the bank knows
nothing about the property you are buying. Unless you are able to pay cash or
contribute a hefty percentage of the selling price, the bank will want to value
the house to make sure it is worth what you have offered. This takes time, the
paperwork takes time and it is better to allow the recommended period than to
insist on a week or two for approval then be in the aggravating position of
having to request extension after extension. It happens all too often. It
annoys the hell out of the seller and could mean the contract runs out of time.