Some people believe finance lenders are out to get you. This thinking is born out of a misunderstanding of how they determine who to give financing too and on what terms. However, if you know how they arrive at their calculations, you will find the process is far from being ad-hoc and is actually very straight-forward. These lenders all have established formulas that look into the 4Cs: Capacity, Credit History, Capital, and Collateral. How solid you are in these areas will dictate how good of a candidate you are. Here, we take a look at each factor and give suggestions on how you can improve your score in each of them:
1. Capacity
Essentially, takes a look at how much you can borrow. This will look at factors like how much money you make and whether you can pay off the debt. The general rule is that your mortgage payments should not be more than 30% to 35% of your monthly income. This debt percentage should include not only the mortgage payments, but all other debts like auto loans and credit card debt. Continue reading ‘Finance Lenders – What it Takes to Impress Them and Get the Financing You Want’
