Your Stengths and Weaknesses

So far, we have covered the advantages and disadvantages of homeownership and discussed the important of savings in regards to buying a home. And are you still itching to buy that home? Good. Today we are going to cover three aspects that you should consider even before you go in and get that pre-approval: What are your strengths? What are your weaknesses?

Your Strengths

Let’s start with your good points. The following is a list of strengths borrowers like you may possess. Take a look, which strengths do you possess? The more strength you have the better position you will be in to get approved and get the best interest rate possible for your financing.

• A good and long credit history. The longer you have had credit established helps lenders determine how you handle your finances, even through life’s down times. The payment history of your credit is important also. Have you made your payments on time? The last 12-24 months worth of payment history is reviewed closely.
• Good reserves. We discussed in my last blog the importance of saving and/or making a down payment on your mortgage.
• Good job history. This is not as important as it once was but it can still play a roll if other areas of your file are not as strong. If you have been at the same employer for 2 years or more, it shows that your life is stable. Don’t worry if you have changed jobs within the last 6 months if you went to a job that is in the same line of work or higher pay.
• Good residence time. Of all the strengths you may possess this is the least weighted. Again if you have been in your current location for at least 2 years it is considered stable.

Your Weaknesses

Of course this would be the opposite of the above. Consider the following:

• A short or poor credit history. Do you have credit established? Having no credit can be as difficult to find financing with poor credit, maybe harder. Lenders rely on credit reports to establish a track record of how your handle your debts. With no credit established it makes the decision much harder. Have you had issues with making your payments on time? Again, the last 12-24 months is looked at the closest.
• Little or No reserves. While you may be able to get into the home with little or no money out of your pocket, if you have no savings or reserves it may make life difficult if an expensive appliance breaks or you have some other emergency expenses that need to be paid. In essence, you would have nothing to fall back on if times get tough.
• Job hoping. Have you had multiple jobs in the last 2 years? It may reflect that you have difficulty maintaining employment and if you can’t maintain employment it makes the mortgage payment difficult to meet every month.

The next couple of blogs will feature how to turn a weakness into a strength (game plan) and your credit.

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