House hunting is a mixture of fun and frustration, especially for those who are jumping into the game for the first time. But with a little bit of planning and preparation, the process can run a whole lot smoother.
This week we’re talking with Matt Ninness, who is an experienced lending officer and was happy to offer some advice to buyers. Matt says that where many people trip up is not arranging their finances first.
“If people get preapproval, they know exactly how much they have got to spend,” he says.
“It’s a good idea to get this in writing before you go putting a deposit on a house you like.”
Arrange an appointment to meet with your bank’s loan officer and make sure you bring all the required documents.
Most lenders like people to bring in about two recent payslips, financial statements and personal tax returns for the past two years for people who are self-employed or own companies, savings records such as bank statements and for those who are building, bring along the plans and specifications and all relevant details of the builder.
Other things that might be required are house insurance details if your existing home is being used as security for the loan, car and personal loan details as well as some identification (birth certificate, passport, Medicare card, driver’s licence).
“As long as you satisfy the lending criteria and if, required, the Lenders Mortgage Insurance, if applicable, preapproval should only take a couple of days,” Matt says.
It protects the lender, not the borrower, in the event of the customer not paying their loan and the property being repossessed. Lenders Mortgage Insurance came about after deregulation of the banking industry. Before the insurance was available borrowers had to come up with a 20% deposit but these days people can borrow up to 95% of the value of the property so people don’t have to save up as much to put up as a deposit. Be aware that this insurance does not cover the borrower. And the mortgage insurer will have to assess and approve the borrower as well.
So, with a written pre-approval, it’s time to go check out the market. Before finally deciding on which house to buy, inspections are a must. Next issue we will look at the different types of inspections for existing houses and why it’s so important to have them carried out. Meanwhile, happy house hunting!