28 April 2020
Financial planning while taking a home causes us to hyperventilate without fail.
This is an integral decision in our lives, where we are financially able to get a house of our own, but we dread the debt that follows to get one.
We need to involve ourselves in comprehensive financial planning, tackle debts and control our money efficiently.
We will discuss about few things that can help us in applying for a home loan without any hassle.
1. Firstly to get a home loan, we need to have a decent salary and a secured job. We should be regular with income tax payments and filing of the returns as well. We should also get our form 16 from our employer.
2. It is extremely crucial for us to have a good credit score. In the absence of a good credit score, the financial institution might reject our loan request.We should be prompt in paying our debt on the due date.
3. We need to also keep a check on any other loans that we have applied for and taken. Financial institutions monitor our capability to repay. For example, If we have taken many loans that occupy 50% or more of our salary, then we probably might not be in the state to repay the loans. Hence a balance is advisable.
4. We need to get a mortgage banker involved in the process of selection of loans.
There are innumerable loan options provided by the lender, and we at our part have innumerable questions. Having a mortgage banker leads to us making decisions faster with efficacy.
5. As mentioned, financial institutions evaluate our repayment capabilities. the lending instruments will ask us for all the investment data that we have. We would be required to share the details of bank account/s, post office savings schemes, insurance plans, employment details etc. In case we are freelancers or self-employed, then we need to give the bank the details of our income, income tax return, balance sheets , so that they grant a loan.
6. It is very important for us to assess the kind of property that we choose to get a loan for. It may become a little difficult to get the loan sanctioned if the property is a resale property of age 10-15 years. The financial institutions also evaluate the construction stages of the property. The property needs to be dispute free as well.
So it is wise to be safer by going for a property that falls under a good record and is on pre-approved list of the banks.
7. While applying for the home loan, we need to be ready with the down payment. Most of the banks give allowance for eighty five percent of your loan. We need to pay the remaining amount as down payment.
8. The repayment time also is an essential factor to contemplate upon. We can choose the time to repay our loan. But while deciding the time limit, we need to consider the fact that a longer period of repayment time will lead to lower EMI’s but higher rates of interest. We also need to consider our age too at the time of repayment. Will that be the right time and will we have the ability to repay at that age? So we need to make the choice accordingly.
9.The financial institutions do not press on the need to have a guarantor. However having a sense of guarantee ,leads to an increment in our credibility.
Also there are cases where in it becomes mandatory for us to have a guarantor. For example, if we are self-employed, or if we are on a transferable job, if our city of purchasing the property varies from the city where we reside etc.
The guarantor could be our friend or family. And he/she takes guarantee in the legal space. But there is criteria for the guarantor. There are age and income standards that are set by the financial institutions, and if they are not fulfilled then the person can not be a guarantor.
In case we become delinquent, and we are unable to pay back. Then it is our guarantor’s responsibility to repay the loan.
10. If we apply for a certain loan amount, and it is not getting sanctioned, then we can choose to apply for the loan with our spouse. The chances of getting approval increases.
11. Having an appraiser in place helps all the parties aware that you are paying a reasonable price. The financial institutions arrange for an appraiser who essays the role of a third party. The appraiser evaluates and gives an estimate of the value of the house that we intend on buying.
At the stage of closing the process, there is certain paperwork that we need to get done with. It takes a few days for the lender to fund your loan after the completion of paperwork.
Our intention was to draw your attention towards certain basic but crucial points that are required in the home loan process. Hope this article helped! Happy Buying!