Things to Prepare and Expect when Buying a House

Buying a house can be very exciting. However, for most of those who have gone through the process, surely they would attest to this reality: that when the hard work begins, the excitement subsides and "dies a natural death".

The requirements and the processes involved in buying a house or getting best home loans can be very tedious. Therefore, it is very important that buyers are made aware ahead of time what to expect, as well as what to prepare, so that the whole process will run smoothly.

Things to Expect and Prepare

1. If you're a first-timer, and you don't have a previous or an existing relationship with the lender, they will require from you, the borrower, identification, up to the value of 100 points. To meet the required points, you may present the following: a driver's license (40 points); a credit card (25 points); and a birth certificate (70 points). Bear in mind that only original documents are accepted.

2. Home loan applications are usually 10 pages long, and you have to answer each and every question completely. To be able to provide accurate answers (as this will be the basis of whether your application gets approved or not), you need to prepare ahead of time.

Through the home loan application process, the lender will attempt to find out as much information about you as they can. The lenders' interest centers on four things: 1) your capacity to repay; 2) whether you are a good financial risk; 3) what your collateral is; and 4) if you have existing assets.

The questions in the loan application would definitely include the following: Number of dependent children; How long you have lived at your current address; your assets and liabilities (what you owe and own); your accountant's details; if you have personal insurance; and your credit cards.

3. These are the normal documents that you have to present to the lender:

o At least the two most recent pay slips;

o group certificates for the past two years;

o A letter(s) from your employer(s) detailing income (for the past two years) and length of employment

If self-employed:

o Past two years' tax returns and your accountant's details, or

o Past two years' financial statements and your accountant's details. (Some institutions will also ask for a profit and loss statement certified by a registered accountant, so you might as well have this at hand.)

Saving details:

o Bank statements including transaction, savings, or passbook accounts;

o Investment papers including managed funds or term deposits;

o What you owe and own (Your personal Balance Sheet and Income Statement);

o Details of personal loans, credit cards or charge cards. Up to six months of statements should be produced to support these loans;

o Tax liability (if self-employed);

o Life insurance policy details;

o Superannuation details; and

o Approximate value of other assets such as furniture and jewelry.

The Deposit

This is an important requirement when buying a house, unless you are planning to avail of a loan that does not require this, such as No Deposit or Lo Deposit Home Loan.

Normally, the deposit that will be required from you will usually be around 20% of the purchase price of the property. However, you will be able to borrow up to 90%, if you pay lenders mortgage insurance with your loan.