Before you start shopping for your property, it is a good idea to make some preparations.
Build Your Green File
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
- Financial statements
- Bank accounts
- Credit cards
- Auto loans
- Recent pay stubs
- Tax returns for two years
- Copies of leases for investment properties
- 401K statements, life insurance, stocks, bonds, and mutual account information.
Check Your Credit Rating
Know your FICO score. If it’s not ideal, then do what you need to do to make it ideal. Dispute. Pay off loans. Get your income to debt ratio in check. Your credit score will have a huge impact on what type of property you can buy, and at what price. The lender will research your credit ratings from the three credit reporting agencies Equifax, Experian and Trans Union. This in part determines your interest rate as well as your loan amount.
Be Careful With Your Finances
Now is not a good time to make sudden career changes or large purchases. Again. Now is not a good time to make sudden career changes or large purchases. Seriously, do not quit your job and start your own company or buy that new Tesla. You want to approach your property purchase from a position of financial stability. Unless you are buying all cash, you need to present yourself to the bank underwriters who will be providing you a loan. It’s imperative that you show that you can maintain the payment on their asset until it is paid off.
One final time. Now is not a good time to make sudden career changes or large purchases.