Dennise Williams, Staff Reporter
TRACEY
THE DECISION to purchase property can be an emotional one in which you can get carried away by your dreams. Calling about prospective properties, visiting them, and finally finding 'the one' can send you into a state of euphoria.
You can see the living room furniture layout in your head and know exactly the colour scheme of your bedroom.
And so you make an offer. If you are offering cash, then all is well. For most of us, though, a little deposit has been saved up and we need the building society to carry us the rest of the way to home ownership.
And this can either be a
positive or negative experience.
In the worst case, the building society denies your application on the grounds of financial inadequacy and you have to watch in stupefied horror as another, more financially prepared, purchaser snaps up your dream home.
But there is a way to avoid losing out while ensuring that the experience with your mortgage officer is positive.
It's called pre-qualification where your home ownership
fantasy is tempered by the reality of your financial situation.
All four building societies
surveyed by Sunday Business offer it in various formats.
NATIONAL HOUSING TRUST
The National Housing Trust (NHT) is not included in the list as it requires that one be a contributor before any discussions can take place regarding qualifications for a mortgage.
Building societies on the other hand, operate in a more competitive environment and do not, in some cases, require that you be a saver to qualify for a mortgage.
General manager for mortgage financing at FirstCaribbean Building Society, Lenworth Tracey, explains the pre-qualification process. "Primarily, it makes the whole concept of finding the right property and financing it
easier. If you come into our offices with an idea of your income and
expenditure [we] can tell you how many houses you can buy."
And that is the thrust of pre-qualification. At Jamaica National Building Society (JNBS), Victoria Mutual Building Society (VMBS) and Scotia Jamaica Building Society (SJB), the representatives were clear about one thing bring in your financial data and the
mortgage officer will look over your documents and tell you how much you can borrow.
Essentially, all building
societies want the same type of income verification. For self-employed individuals, a statement of income prepared by a chartered accountant will be required.
For salaried individuals, the last two or three payslips, plus an employer-prepared income
verification letter will be required.
MORTGAGE PROCESS
Mr. Tracey adds, "Pre-qualification puts you in a different
mindset. You can shop with
confidence. You will get a letter from us, at no charge, saying that you pre-qualify for, say,
$5 million. That way you don't waste your time looking at $10 million homes. Plus, it gives you a stronger negotiation position as you know exactly what we will lend to you."
Of course, Mr. Tracey was quick to point out that once you are ready to begin the mortgage process, the bank will not be held to the pre-qualification letter if your financial documentation (payslip, loan balances, credit card balance, etc.) does not support what you said in the initial
interview.
COMMITMENT LETTER
The customer service
representatives at SJB and VMBS told Sunday Business that while pre-qualification letters were not issued to clients, a prospective
borrower could schedule an
interview with a mortgage officer to have an idea how much money he can borrow.
At Jamaica National, however, they do issue commitment letters.
According to a JNBS customer service representative, the
pre-qualification for a mortgage can be done in two days.
"We will say what price range your salary can support. And while there is no charge for the
interview, if you need a commitment letter, it costs approximately $10,000."
