Research Process Paper

Essay by angelynjones February 2009

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Importance of the Research Problem

Individuals often find themselves at place in their lives when they feel ready to purchase a home or property. Acquiring the proper knowledge that is necessary in obtaining a loan is extremely important. Most individuals are not aware that a process must be followed in order to achieve their desired outcome. The most important factor is knowing how much the individual can afford. Depending on one's credit score, income, and current monthly expenses will determine what the individual can afford when looking for real estate.

Variables to be tested

Three variables exist that this research will test, credit score, income and debt ratio. Individuals need to use their income wisely and be aware of how credit scoring works in order to get out of debt. Credit scoring is a collection of data concerning an individual and his credit history. One's credit report contains payment history on bills including late payments and collections held against him or her.

The information on an individuals credit report is compared with those persons in the same profile in order to determine the risk the individual would be on the creditor.

A person's annual income has a tremendous influence on how much house an individual can afford. Some people attempt to purchase real estate without financing, which is not recommended. Therefore, most individuals apply for loans that are 80 to 90 % of the purchase price. The buyer is then required to submit a down payment. If the buyer has a steady income, as well as decent credit, a creditor may decide to finance the client up to 95%. If consumers are made aware of this, they are more apt to save the money necessary to make a down payment.

One's debt will greatly influence the size of loan the...