Prepare a Financial Status File
In order to secure financing for your new property it’s suggested you create a “financial status file” of documents, which will be required by your chosen financing institution to secure your loan. Typically thefile should contain documentation for the following:
- Statements to include 401K, life insurance, stocks, bonds and mutual fund accounts as well as any other investments.
- Bank accounts
- Credit cards
- Auto loans
- Recent pay stubs
- Tax returns for two years
- Copies of leases for investment properties
Check Your Credit Rating
Your credit score has a large impact on what type of property you may buy and at what price. You should check your credit rating from the three credit reporting agenciesEquifax, Experian and Trans Union, as this will be information any lender will be looking at prior to loaning money.
Credit scores range between 400 and 800. 620 + is considered “good”. 680 + is considered “premium” and may possibly help get you a lower interest rate.
Below you will find the contact information for the three major credit reporting agencies to help you determine your credit rating. Ask your lender how you might be able to improve your credit score if you needed.
- Trans Union
Savings & Debt
If you are buying real estate, it is always good to pay down any existing high interest debt like credit cards or car loans for instance. It is also wise to accumulateverifiable funds toward your down payment, closing costs (appraisal, miscellaneous fees, escrow, title insurance, etc.) and expenses such as inspections.
Stay On Track
The following don’t particularly mix well when seeking financing for a property purchase…changing careers, moving your money around, or buying big ticket items. Lenders love stability. If you are considering any major changes, reconsider doing so until you have met with a lender and asked them if this would impact your possibility for a obtaining a loan or how you should proceed.