How-to-determine-your-buying-profile_1136_441770_0_7070483_500When pursuing the path to homeownership, it is important individuals first determine the status of their personal finances and identify their buying profile. This characteristic, which is found by factoring income, debt and asset levels, can help give those planning a first time purchase a firm understanding of the size, type and estimated value of property they can afford.

If you’re looking to discover your purchasing power, it is possible to do so by examining your financial standing through the careful consideration of the following factors.

Calculate your real income
The amount of money that you regularly receive each month and year is arguably the biggest part of identifying your buying profile. This figure includes your gross salary if you are a W2 employee and net income if you are self employed. Consistency of income is also an important factor as well. Interest accrued in asset accounts, returns seen on investments and even capital gains can be used as income in some cases. Lending companies will use these numbers along with other factors to establish a payment size that you will comfortably be able to make each month.

Current debt load
Through the use of a tri-merged credit report, lenders will look at how much money you owe, whether it be to creditors or individual businesses. The monthly debt obligation is the critical number to help lenders determine your ability to afford more debt with a new home. Additionally, your credit report and rating may be used to illustrate your history as a borrower.

Evaluate amount of real cash
Cash refers to the amount of “liquid” money that you currently have available in various bank accounts. This is typically used by lenders to determine prospective borrowers’ net value and ability to make payments on time if their regular flow of income is interrupted for whatever reason. Additionally, the cash available in your bank accounts will help determine the amount of down payment you can afford on the new home. If you have substantial cash savings, you may be able to make a larger down payment. This can help you to build equity faster and obtain more favorable rates for your loan.

Once individuals have determined their buying profile, they can be better prepared to apply for residential financing preapproval and begin the house hunting process.

Poli Mortgage Group, a leading lender in 18 states – including the District of Columbia – has originated more than 30,000 mortgages in their years of operation. Founded in 2001 by brothers Chris and Chip Poli, the company now writes more than $1 billion in mortgages each year, and has helped thousands of clients to purchase property.