| Buyers Handbook |     |
| Financing
Basics |
| It is a good
idea to talk to lending institutions before you start looking at specific
homes. Firstly you can search with confidence knowing your price range,
and secondly you will have greater bargaining power. In putting in an offer
on a house, to have a pre-approved mortgage is a definite negotiation asset. |
| The basics
of a home loan are a good credit rating, stable income and sufficient cash
for a deposit. |
| Your
credit rating tells the bank how financially responsible you are. If you
have had credit problems in the past, draft an explanation letter sticking
to the facts that show the problems were localised in time. Show that the
problem was due (for example) to a divorce or an illness you have recovered
from. If you have never been for a loan and thus have no credit history,
list the various bills you have paid, especially large items such as insurance
or education payments. |
| It is important to lending
institutions that you can consistently meet your mortgage repayments. This
means that they will be looking at how long you have held your current job.
So for a self employed person they will average income over two or more
years, but may be happy with the gross monthly salary of a wage earner. |
| Be aware of the (cash)
deposit you will need for your home, as well as government charges on your
loan. If after consulting with various lenders you don't have enough money
to go with any of them, start saving. "Pain money" is the best way to get
your deposit. Forgo any luxuries and non-core expenses for a few months
and you will soon be in the market for a loan. Otherwise sell that boat
you only use four times a year and hold a monster garage sale. |
| Don't
lose hope through this search for a home loan. This is one of the most difficult
steps for everybody. |
| |
