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Tracey Lynch

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Mortgage Information for Buyers

More than 90% of all property purchases involve a mortgage loan.  A lender can assist you to
determine you personal buying power.

Personal Buying Power is determined by these factors:

Factor One: Your Income

Lenders will review your income to help you determine the price of the property you can afford to
purchase. Lenders will typically ask for income tax returns, check stubs and other
documentation that will be used to help you establish your appropriate purchase price and
maximum monthly payment you can afford.

Factor Two: Your Credit

You will be asked to allow the lender to "run" your credit report.  Your credit report includes a
"score" which tells you and the lender how you are credit-scored as a consumer by those who
lend money. The report will include several years of credit history, and if married a history of both
spouses.

Factor Three: Your Employment

Employment is an indicator of stability. Lenders like to loan money to consumers who have
consistent maintained employment with a single employer or similar career path. Consistent
employment history gives the lender a picture of your stable ability to earn income in order to pay
down the debt on the mortgage. Self-employed individuals will have a somewhat different set of
criteria than those who are employed by a company.

Factor Four: Your Appraisal

Lenders will usually want an appraisal of the property you are purchasing prior to making a
commitment to lend on that property. This is done in order to protect both you and the lender
from overpriced properties that might tend to be a bad long-term investment for the buyer and
the lender. An appraisal is a good instrument for protecting your financial investment in the
property. Costs for the appraisal range from $250-$600 depending on the property, its location,
amenities and size. The cost is a negotiable item between the seller and the buyer.

Factor Five: Your Down Payment

As a Buyer of property, you will be asked to demonstrate the ability to fund the down payment
from either personal funds or, in some cases, gift funds. The amount of down payment affects
many aspects of the loan such as monthly payment, interest rate and even the lenders requiring
the buyer to purchase a "Mortgage Insurance Premium" or Private Mortgage Insurance policy
(MIP or PMI). Typically, if a buyer pays less than 20% down, they are sometimes required to
purchase the additional insurance.  

 

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