|Advance to Boardwalk without rolling dice|
Published: Jun 21, 2012
Location. Location. Location. It’s often used as a catch phrase in the real estate market, because it speaks to maximizing value for money for the intended investment in a piece of land or property.
Purchasing a piece of property or a new home is one of the single largest investments a person or couple will make. It’s not something to be pursued without commitment, performing due diligence and securing all the financial facts to make a dream home or land purchase a reality.
On this boardwalk of life, the journey to home ownership ultimately leads to the doorsteps of a prominent or perhaps lesser-known real estate agent. Most prospective land or homeowners pretty much have an idea of what they want, but before an advance or move to Boardwalk, the sticky and pertinent question of how to pay for it must be addressed.
Most real estate agents would suggest to prospective buyers that they move to secure prequalification from a financial institution in a bid to steer them closer to home or land ownership purchase.
Engaging in discussions for pre-qualification is no time to be shy – it means baring all the facts for the best possible diagnosis. If information is withheld, it could possibly hamper the process, so it’s best to be prepared in terms of assessing your budget and considering what a dream purchase might actually cost.
During the process of prequalification, most lending institutions assess salary, debts and other liabilities in consideration of approving the loan. Typically lenders require applicants to present at an appointment a passport, national insurance card, a job letter and pay slip. The average time for the appointment can last between 30 to 45 minutes. Most lenders require applicants to secure 10 percent of the purchase price of the piece of property or home for the proposed investment.
Additionally, if there are existing loans or credit card payments, the lender should also be provided a copy of those statements. The pre-qualification process is similar with lending institutions and varies depending on if there is a specific marketing campaign engaged.
First-time homeowners could have stamp taxes waived if the applicants qualify for an exemption.
Only by being armed with relevant information can a prospective land or homeowner seek to secure the best possible loan, which would not derail a family’s economic stability. To date, many Bahamian homeowners face the prospect of foreclosure because of changes in their financial landscape. In these turbulent financial times, the need to ensure due diligence cannot be overstated when making such a hefty financial commitment. As old folks often say, “Don’t hang your hat too high”.
Prospective homeowners should ensure their standard of living is maintained even after the dream home purchase is secured.
So, like the card that sends a Monopoly player to jail, or limits a player’s chances of passing “go”, prospective homeowners should be clear on what mortgage payments are likely to be charged, the length of the mortgage and the interest rate.
Seeking the advice of a financial planner is not a bad idea, nor is shopping around with various financial institutions and securing the best possible loan. One or two percent in interest could make a sizeable difference when it comes to 25- or 30-year mortgages.
• William Wong is president of Wong and Associates Realty. He was also a two-term president of The Bahamas Chamber of Commerce and The Bahamas Real Estate Association. Questions or comments can be emailed to firstname.lastname@example.org.