Make It Home: How To Get Pre-qualified For A Loan!
By SUZZANNE COUSINS
Big dreams with a small budget can really put a damper on your ‘house on the hills aspirations’, so knowing your mortgage approval options before signing up for House Hunters would be a better option. But how do you get pre-approved for a mortgage in Jamaica and what do you need?
The Answer:
“Getting a mortgage pre-approval is an essential first step in the home-buying process because real estate agents and sellers want proof of the buyer’s ability to secure a mortgage and to bid on a property,” says a mortgage representative from a leading lending institution. She explains that the pre-approval process is simple and manageable for any potential homeowners, as it entails providing your income details and outlining any existing debts you may have.
“Persons residing overseas will require a credit report, which should include their credit score. It should also be noted that you can join with other persons to purchase a property, and that similar documents will be required for the other party or parties,” she explains.
What do you need?
Whether you will need to approach a credit union, bank or building society, any lending institution is going to consider four primary factors when you apply for а home loan – your assets, your income, your expenses and your credit history.
Assets: Anything you own.
This may include any other real estate property you may own or co-own and maybe even any vehicles you own or co-own, therefore original or certified copies of land or vehicle titles must accompany your application.
You should include the most recent valuation of your vehicle or home if possible. You may also include originals or certified copies of Certificate of Deposits or Stocks or any other financial instruments you own. Really, anything of value that you own could and should be declared at the time of application to boost your net worth and ultimately your chances of pre-approval.
Income: How much money you make.
Generally, you are required to bring in an employment letter and at least two of your last pay slips if paid monthly or up to your last six pay slips if paid weekly. Most banks in Jamaica require up to six months’ worth of bank account statements. But, if you are self-employed, you may be required to provide as much as three years’ worth of bank statements in addition to updated Financial Statements of your business.
Expenses: How much you spend.
You will be required to outline your current expenditure on loans, credit card payments, rent, household expenses – including utilities and grocery – personal expenses such as health, insurance, entertainment and transportation or fuel and the list goes on. They say your mortgage should not be more than one-third of your income, so most lending institutions will try to work out a payment plan based on your spending patterns.
Credit History: The records that show how responsible you are with repaying debts.
Like in the United States, lending institutions here in Jamaica have now joined the notion of checking the credit history of borrowers to minimise the risks associated with lending. Once you apply for a mortgage or any loan, your bank has the right to request your credit information, which they use in collaboration with your application and documentation provided to help determine your eligibility for a mortgage and the amount you qualify to borrow.
According, the National Housing Trust (NHT), it is wise for house hunters to attain an eligibility letter, which is a letter that it prepares and issues for applicants in either of two instances, for the Joint Financed Mortgage Programme (JFMP) or confirmation of loan limit.
Under the JFMP, applicants access a mortgage loan through another institution, like a bank, credit union or building society. That institution processes all the relevant documents and forwards them to the Loans Department of the NHT after which the Eligibility Letter is prepared and issued but expires after six months. While the confirmation of loan limit allows applicants to get their eligibility letter on the same day if they provide all the relevant documentation, it carries an expiration date of three months.
You may request the eligibility letter at the Customer Service Unit or the Mortgage Information Unit at any NHT Branch.
You will need to provide the following:
• NIS Card of the person applying for the loan
• TRN Card of the person applying for the loan
Pay slips for the last two (2) months
• Verification of Gross Income and Contributions letter from present and past employers
• Valid identification (current Jamaican passport, national voters ID or driver’s licence).
So, there you have it! Simple steps to follow before moving out of your parents’ home. Big dreams need the proper budget, and the right budget must be approved before choosing a home.
