Things to Consider Before Availing Home Loan

“If repairing one’s credit is as easy as sending some dispute letters to the credit bureaus, then why doesn’t everyone have good credit?” ~ Tyler Gregory

Owning a home is one of the most significant investments in anyone’s life. The process gets challenging and exciting when you are proceeding to purchase a home for the first time. From the documentation to choosing the right property type, there are a lot of steps to be kept in mind. But before anything else, it’s important to undergo the home loan process.

Home loan – The essential requirement to purchasing your dream home

No matter if you are planning to get a lavish mansion in a plush location of the city or purchase an apartment with a picture-perfect gallery view, you will need to undergo the home loan formalities. Home loans are necessary to maintain your accounts, keep the credit score in the right direction and help you save some bucks on the tax payments.

Common types of home loans are –

1. Fixed-rate loan – In this, the interest rate is pre-defined and fixed throughout the loan tenure.
2. Floating rate loan – The overall rate of interest depends on the lender’s benchmark rate. This means the rate of interest changes in alignment with the benchmark rate fluctuating frequently.
3. Combination loan – This loan type encompasses the components of both; fixed and floating-rate loans.

Understand the eligibility criteria –

Begin the process by finding out if you are eligible for a housing loan or not. Here, the lender may ask about your income, repayment history, and capacity. The other necessary considerations include – financial position, stability, age, spouse’s income, number of dependents, nature of the profession, and job stability.

The overall loan amount –

As per the regulators, lenders offer a housing loan ranging in between 75% to 90% of the home property’s overall cost. Further, it also depends on the loan value too. Besides this, remain familiar with loans for average credit score and why it is required for home loan approval. If you are clueless about the required credit score, consult a professional from this stream.

Complete tenure –

Generally speaking, the home loan can be sanctioned for a maximum time limit of 30 years or three decades. Again this is subject to the customer’s eligibility for a home loan application. The primary reason people prefer to go for longer loan tenure is the less EMI burden, which helps pay off the debt without facing many financial crunches.

Documentation –

If you are purchasing the home for the time, consider connecting with an experienced professional, helping you sail through the process quickly. But before that, make sure to be ready with the essential documents, income or credit papers, reports, property documents, ID proofs, etc.

The last word –

Home loans can turn into a perk or burden, depending on your credit score and payment history.

People tend to neglect credit score maintenance then realize its importance later when getting the home loan application approved. Purchasing a dream home is one of the significant investments in life. Thus should be done with utmost care. As far as the financial requirements are concerned, consider consulting a finance professional for the best results.