Buying a Home is a Huge Investment. Make Sure You're Ready.
Purchasing a house is the single largest purchase and investment you will make in your lifetime. When you are ready to apply for your mortgage, make sure that you are aware of all the factors that can affect your ability to qualify for a mortgage approval. Today we will cover the last qualification factor, your capital.
What is Capital?
First off, what exactly is your capital? Capital is your wealth in the form of money or other financial assets owned by you. It’s one thing to show that you are receiving income, but it is another to show that you are financially responsible.
How Can I Prove My Fiscal Responsibility?
Showing your lender financial responsibility by having money available in your savings accounts or other sources will make your lender more comfortable extending out an approval. This essentially shows that you are able to cope with any financial emergencies that may arise after moving into your new home. Having saved capital additionally shows that you know how to save money and budget, which is a good sign of being able to pay off a mortgage.
What are the Other Costs That Capital Should Cover?
Other than emergencies that may arise after obtaining a mortgage, lenders also want to ensure you can afford to pay the various costs associated with obtaining the loan. Some of these costs may include:
- Down payment
- Loan fees
- Closing costs
- Moving expenses
How Can I Help Lenders Verify My Capital?
Lenders will need proof to verify your capital. To ensure there are no issues with verifying your capital consider the following tips:
- Avoid depositing any large sums of cash that cannot be verified
- Some loan programs available for low-income buyers may allow for gifted funds, but talk to your lender before depositing such funds
- Keep track of your bank statements and any other financial documents to help verify your capital
What If I Think I Might Not Qualify?
If you think you may not be qualified for any reason, have an open discussion with your lender to figure out your options. For more information on the home buying process and additional credit tips, check out our Resources page.
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For any questions or to schedule a free credit consultation, contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.
