By Elizabeth McLachlan
Buying a property is an exciting but also a stressful event. Finding the right home for you and getting your home loan approved can be very a daunting process, but with a bit of organization and planning you might be moving into your new property faster than you think. Here are some things to avoid before you apply for a home loan:
1. Don’t Move Money Around
When you apply for a home loan, you will be asked to submit statements for the last 3 months on any of your savings accounts, check accounts, mutual funds and even business accounts. If you moved around large amounts of money during this time, a lender will require all documents regarding these transactions. Avoid wasting time by not moving around money before you apply.
2. Don’t Make Major Purchases
Usually when you make large purchases like a car or vacation, there is debt involved. This will greatly raise your debt-to-income ratio, meaning a lender might determine that you can’t afford a home loan.
3. Don’t Change Banks
As already mention, lenders will require bank statements for the last 3 months. If you changed banks during this time, you will once again make a lot of work for yourself, as all documents regarding the change of bank will be required.
4. Don’t Apply for a Credit Card
Getting a credit card before receiving a home loan will urge the lender to question your financial stability. It is saver to wait until after the mortgage is complete before you apply for credit cards or store credit.
5. Don’t Change Jobs
Lenders like to see stability, not only in you bank accounts but also in your job. This means that if you can prove that you have been with a company or your own company for 2/3 years and during that time your income stayed stable, a lender will be able to make an accurate calculation of your gross income.
There are also a couple of things you should do before you start the house hunting process:
1. Do Thorough Research
Once you’ve decided on where you want to purchase property, be sure to do in-dept research on property prices, recent sales and crime in the area as well as general info on the schools and amenities it offers. The Internet is a great source of information but it is sometimes good to visit the area to get a general feel of the place.
2. Determine Your Budget
Budgeting means you have to determine how much property you can afford. Review your monthly income, expenses and savings. Always remember that as a first time buyer you would need a substantial amount of cash in hand to settle a deposit and/or closing costs. Also leave some leeway in your budget should the interest rate increase.
3. Get Your Home Loan Pre-Approved
Having a pre-approved loan basically means your credit files have been reviewed and the loan officers believe you can readily qualify for a given loan amount with one or more mortgage providers. Real estate agents see a pre-approved loan as a sign that you are a serious buyer and treat you like one even before your loan is approved.
4. Find the Best Estate Agent
There are a large amount of estate agents looking to sell you a property. Be sure to get the best agent by checking references, using someone with a good reputation and loads of experience in selling property in the area you are interested in.
5. Get All Financial Records Ready
While you are in the process of find a property, make sure that you get all your financial records, as you will be asked to submit it for all your loan applications. You are making the job of approving you application a lot easier by submitting the right documents.
About the Author: Elizabeth works for a property portal called SAHometraders which advertises property for sale in all areas of South Africa including Langebaan property, Melkbosstrand property and Cape Town property.
Source: isnare.com
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