Best Tips For Home Loans
The home buying process can appear complex, but if you take things step-by-step and you know how to decide the right home loan, you will soon be holding the keys to your own home!
Ten steps to buying a home
(1). Learn about home buying programs
(2). Shop for a home. Choose a real estate agent, Wish list - what features do you want, Home-shopping checklist - take this list with you when comparing homes.
(3). Make an offer. Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.
(4). Figure out how much you can afford. What you can afford depends on your income, credit rating, current journal expenses, down payment and the interest rate. The calculators can help, but it is best to visit a lender to find out for sure. A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that down payment!
(5). Know your rights
(6). Shop for a loan. Save money by doing your homework. Talk to several lenders, compare costs and interest rates, in addition to negotiate to get a better deal. Consider getting pre-approved for a loan.
(7). Sign papers. You’re finally ready to go to “settlement” or “closing.” Be sure to read everything before you sign!
(8). The House is yours now. Have Puja or hawan.
(9). Get a home examination. Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.
(10). Shop for homeowners insurance Lenders require that you have homeowners insurance. Be sure to shop around.
Terms used in Housing Finance
(1). Prepayment Penalties: When loan is paid back before the agreed term of the loan, then banks/ institution charge penalty for the prepayment
(2). Commitment Fee: Some institution charge commitment fee in case the loan is not availed within a stipulated period, after it is processed and sanctioned
(3). Miscellaneous Cost: It is quite possible that some lenders may charge documentation or consultant charges.
(4). EMI: Equated Monthly Installment till the loan is paid back. It consists of a portion of interest and the main
(5). Floating Rate of interest: Rate of interest which varies with the market lending rate. This means that there is an element of risk of paying more than budgeted amount in case the lending rates goes up
(6). Monthly Reducing balance: In this system interest reduces monthly with repayment of Principal amount
(7). Annual Reducing Balance: In this system principal is reduced annually at the end of the year so you end up paying interest even for the portion of principal you have actually paid back
(8). Fixed rate of interest: Rate of interest remains unchanged throughout the period of the loan
(9). processing charge: It’s a fee payable to the lender on applying for the loan
