Home loans being the big transactions that they are, require a certain degree of sweat equity investment to before they become appropriate deals. With a large number of lending institutions in the market, it becomes difficult to zero in on one. The institutions in turn try to woo consumers by projecting their offerings in a light which makes them look dazzling. However the dazzle also hides the hidden terms and conditions which would expose the plan’s drawbacks.
It is therefore advised that one does a comprehensive research before applying for home loans. But what does the “research” entail? The research means knowing all about home loans before opting for one. One of course is not expected to acquire proficiency at a professional level but should know sufficient enough to make the right choices.
Housing.com has provided consumers a comprehensive home loans guide for beginners which allows them to know everything possible that a non professional can know about home loans. The guide is available for free access on the housing.com portal. It has been created by the inputs of professionals from the home loan arena.
Along with the knowledge garnered from the home loans guide, one should also bear in mind the following pointers before applying for home loans.
Keep the Credit Score Clean
Credit scores have become an integral part of home loan application assessment. Banks and lending institutions constantly access credit history information from CIBIL before deciding on whether to grant a home loan or not. The credit history is also used to determine the amount of loan sanctioned and the interest rates provided to a prospective buyer.
Credit history is created over a long term. It is important that a person remains aware of his/her credit history before applying for a loan. Endeavours should be made to push the scores and the home loan be applied only thereafter.
Try to Maximize Down Payment
Maximising down payments is another way to beat the financial blues. The more you pay, the less you have to borrow. The less you have to borrow, the lesser borrowing costs you bear. In short, financial obligations are lesser in the long run. Careful planning and savings can help in maximising the down payment at the time of purchase. This can result in more future savings that one can imagine.
If you already have a loan when you are purchasing a house, it can pose a problem. Firstly, a loan being serviced currently automatically reduces one’s ability to service another. Banks assume higher risk in this case.
Secondly (and obviously) an extra loan being serviced means reduced spending on the personal front. Hence it is important that one clears out any financial liabilities before opting for a home loan. Closing any other pending credits would also add points to the credit report.
Documentation is a vital part of home loan acquisition. Identity and address proofs should be available along with all other possible documents that a bank might need before sanctioning the loan. Documents not being ready can lead to unwanted delays.
Compare and choose
One should compare numerous home loan plans and only then make a choice. Factoring in the borrowing costs throughout the tenure can help avoid ambiguities not clarified during sales.
A little planning before applying for home loans goes a long way into garnering wholesome gains of property purchase.