The process of purchasing a house can be both enjoyable and thrilling and at the same time tedious and cumbersome. However, it is just one step in the whole process. After choosing a suitable home for you and your family, another big task ahead is choosing the right home loan product. It is just as important as picking the house to live.
Hence, you should always take help of hidden tips that can help you to avail the best home loan option.
- Save for Down payment
Home loan lenders usually maintain a margin of the house value. That means your down payment will vary from 10% to 30% of the house’s buying price, which will depend on the lender and the type of loan you want. Setting up a monthly budget would help you save for your down payment effectively.
After assessing your finances, set up an automatic transfer of funds to the down payment savings account. You can start your savings by opening an additional savings account.
If arranging a sizeable down payment is making your budget out of hand, you should consider such lenders that ask for a modest down payment.
- Check credit score
A decent credit score allows you to avail your home loan with the best deal. It is also smart to get a copy of your credit score before the home purchasing process begins. You will see what your credit report looks like for prospective lenders and then, if appropriate, can take appropriate steps to improve your credit score.
- Arrange your paperwork
You have to send a set of financial documents to your lender when you apply for a mortgage. The right assembly of these papers helps to speed up your loan application. You will be required to provide documents such as Aadhaar and PAN card for Identity Proof, latest bank statements, utility bills, etc. for address proof, income tax returns and property documents.
- Use a Home loan calculator
Home loan calculators are perfect instruments to do your budgetary planning. They help you know how much you can afford and calculate your monthly instalments under varying down payments and interest rates. You can conveniently use it to demonstrate how much your annual mortgage payment is due to varying house price costs, down payments and interest rate scenarios.
- Make a comparison of the deals
Not all mortgage products are similar. Even if the loans have the same interest rate, there can be variations in points and charges that will make one deal more costly. To compare the mortgage rates, it’s necessary to understand all the components that make up your loan.
- Track Interest rates
One of the main factors that assess mortgage payments is the interest rate. Home loan interest rates change on regular intervals, and knowing their fluctuations can be very helpful.
- Look for pre-approval offers or Pre-Qualify yourself
Some real estate brokers want potential home buyers to have pre-approved loan offers before they start working with you. The pre-qualification process is very straightforward, typically involving only specific financial details, such as salary, savings and investments. If you are eligible beforehand, you can know how much you will get and how much you can afford to buy.
- Have a comprehensive knowledge of the different loan options available
People usually take a traditional approach to fixed rates for home loans. This doesn’t mean that a fixed-rate loan is a suitable option for you. Some prefer the fixed rates, and some go for flexible rates as per their unique financial situation. Hence, it is necessary to understand the different loan products available.
- Communicate with your lender promptly
You must respond to requests for additional details from your lender immediately after applying for a house loan, and return your documentation as soon as possible. Waiting too long to answer could trigger a delay in closing the loan application. This may create issues with the home you intend to purchase. Try not to end up in a situation where you are at risk of losing your dream home or your deposits.
- During the sanctioning of the loan process, do not screw up your credit
It is not unusual for lenders to look at the credit for a second time to check the recent developments. Make sure you do not do anything that will impact your credit score negatively. Pay all your dues on time, do not apply for new credit cards or vehicle loans until you have closed your home loan.
Home loans are useful financial instruments for fulfilling your dream of buying a home without burning your pocket. Take help of the tips and points mentioned above and avail the best home loan option available.