Many first time homebuyers find it difficult to get the kind of financing that they need. With these tips for qualifying for your first bank loan, you will now have an efficient system to get the money you need to buy your first home.
It is true, daughters more often than not take after their mothers. When I was starting out, I had the notion that I knew everything I needed to know in order to succeed. Yes, I had done quite a bit of research into the real estate niche and I was confident I knew what it took to succeed in this business. Like my daughter, I had no idea what it took to qualify for a mortgage.
Most of us think that it is all about finding the right mortgage broker and lender. To a great extent of it, it really is about finding the right lender. But, what happens when you have scoured the internet; taken every brochure from every local bank you can get your hands on and finally, have found the right mortgage; one that is not too pricey and doesn’t cost you an arm and a leg in terms of interest rates paid, only to find out that you do not qualify?
The first time my daughter called me crying that she had found the right house at the right price but couldn’t buy it because, for some strange reason, she couldn’t get a favourable mortgage, I was taken aback. This is something with which I was intimately familiar. Despite her thinking that she had good credit, some lenders simply felt lending to her was still too risky.
Back then, I consoled her and then set about giving her tips from hard learned lessons on how to qualify for your first mortgage. These are tips that helped me back in the day; helped her as well and will help you too.
You need to start early
The financial industry is set up in such a way that if you have great credit, good income and some money in the bank, then you are a prime candidate for receiving a loan. Most people who qualify as part of this group are either employed (in a well-paying profession and have been on the job for a while) or are high-ranked professionals with great titles and wonderful yearly incomes that leave you wondering why they would need a loan in the first place.
The rest have to build up their credibility over a given period of time. You have to start saving early, show that you can manage your finances well and show that you have the ability to keep a job for a given period of time.
But what about the self-employed? What about those who have low paying jobs? What about those without jobs at the moment? Don’t they deserve to own homes? The truth is, these people can qualify for mortgages and own beautiful homes as well. But in order to do so, they must start working on their pre-qualification process a little earlier. Maybe a year before they even start thinking about trying to find a home and applying for a mortgage.
This is because self-employed professionals are viewed as higher risk. From the banks point of view, self-employed professionals don’t have a fixed income unlike full-time workers. Therefore, if you are self-employed, it becomes all the more important to start the pre-qualification process earlier.
There is a helpful podcast from Rick Otton, which gives tips on how to talk and negotiate with banks. It might be a helpful resource if you want additional info before you apply for your home loan.
Part 2 coming soon…