When you are shopping for a new Halifax home, lenders carefully analyze the details of your mortgage loan application to determine whether they will finance your new home. They determine how likely you are to repay the loan by using a method called "The 5 C's of Credit".
These 5 C's are - Character, Collateral, Capital, Credit, and Capacity; but what do they mean?
- Character - The lender makes a general impression of your character in regards to trustworthiness and the ability to repay the loan. He looks at your educational background, profession, time at your current employment and residence are considered as well.
- Collateral - By requiring an appraisal of value for the property, the lender is assuring themselves that the property is marketable and can be easily resold in the event that the loan is defaulted on.
- Capital - This is the down payment that you will be putting down on the property. The more money you are willing or able to put as a down payment, in the lender's eyes, the more likely you will do all you can to keep up with the mortgage payments. How much capital you have also reflects your ability to save money and build up assets.
- Credit - By pulling your credit scores by a national credit agency,the lender reviews an assessment of how well you meet your credit obligations. The last 6 years are used to obtain a credit score. It is important to look at your own credit scores yearly to resolve any discrepancies so that your scores will improve, increasing your chances of approval.
- Capacity - Lenders will look at your income-to-debt ratio. This is based on your current income and monthly financial obligations. Typically, your mortgage payments should not exceed 32% of your gross income.
If you are in the market to buy a home, call The Roy Thomas Team today. They will evaluate your financial status and how you measure up to the 5 C's of credit. Not only can they find your perfect home, but if there is work that needs to be done to improve one of your 5 C's, they can direct you to the help you need to be on your way to getting the mortgage loan that will put you in that perfect home today!
Selling? Now's the time to get a free home evaluation so you can price it right. Roy Thomas and his team can push your home to the top of the home list, by making sure potential buyers know of all the advantages to your home, inside the walls and out.
Roy Thomas is a REALTOR with Exit Realty Optimum in Halifax, Nova Scotia. Licensed since 1991, Roy has developed his Guaranteed Home Selling System that sells his clients homes Fast and for Top Dollar. Visit Roy online at www.RoyThomas.ca or www.HalifaxRealEstate.TV