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| Top 20 Secrets You Should
Know When Getting A Home Loan If you are planning to
apply for a home loan, there are various types of
home loans available in today's financial market
and each one comes with its own rules and
regulations. Below you will find the top 20
secrets you should know when getting a home loan.
1.Know About Various Types of Home Loans
The competition in the loan market is rising day
by day. Nowadays there are numerous loan packages
which suit almost every budget. Some of the major
loan types include:
One Month ARM's
Five Year Fixed ARM's
15 Year Fixed
30 Year Fixed
100% Home Equity Loan
VA Home Loans
Zero Down Payment Mortgage Loans
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2.Select the
Right Home Loan for You
What a customer needs to do is to research
various home loans and know the benefits,
interest rates and repayment schedules for
individual loan institutions. Make sure you
select the right home loan for you as there are
so many home loans available on the market today.
Don't apply for a home loan from the first loan
company you meet, thinking that they are offering
the lowest interest rates. Before applying for a
loan, make sure that the loan is appropriate for
you needs.
3.Down Payment
As a general rule of thumb, the majority of the
loan providers will be seeking contributions from
borrowers around 3% to 6% of the total loan value.
Make sure that you are selecting the right one.
As the competition in the home loan sector is
increasing day by day, you can easily negotiate
and get the right package for you.
4.Fixed Interest Rates Versus Adjustable Interest
Rates
Fixed interest rates means that your interest
rates will be fixed until the end of the loan
period. On the other hand, adjustable interest
rates (also known as variable interest rates),
means that your interest rates for home loans
will vary (increase or decrease) depending on the
existing interest rates in the financial market.
Before you apply for a home loan decide on which
interest rate is the best one for you, that is
whether you need a fixed rate or one which may
decrease or increase each month.
5. Annual Percentage Rates (APR)
Annual percentage rates (APR) consist of
principle, interests, fees, and all other costs
related with the loan. Comparing the APR of
various loan providers will help you to select
the loan which best suits your budget.
6.Compare Home Loan Features
The majority of home loan customers exclusively
compare interest rates, it is essential to
compare home loan features as well. Keep in mind
that, the more flexible your home loan is the
higher the interest rates. A variable interest
loan permits one to withdraw against repayments
or offset savings against the loan, will also
have a higher interest rate when compared with a
standard home loan. So make sure that you have
compared the home loan features.
7.Think Whether You Need a Redraw Facility
A redraw facility allows borrowers to make
additional repayments on a home loan, and then
have access to the additional repayments they
paid earlier. However, these facilities are
normally available only on Standard Variable
loans which feature a higher interest rate than
ordinary home loans. Think twice before applying
for a loan with redraw facility as it is a little
more expensive.
8.Loan Amount Qualification (Income)
This can differ according to you, your loan
provider, and several other variables. However,
as a baseline to decide on how much you can
afford to borrow, have a look at two or three
times your current household income. This will
tell you how much of a loan you qualify for.
9.Loan Amount Qualification (Expenses)
This is another important category which changes
from one loan provider to the other. However
there are several factors to look at such as
housing expenses, like insurance, property taxes,
and mortgage and long term debt, like auto loans
and credit cards.
To decide upon the loan amount expenses, take the
sum of all of the housing expenses and long term
debt. Make sure that the expenses don't exceed 33%
to 36% of your total household income. The next
step is to examine your housing expenses. Make
sure that the expenses do not exceed 25% to 28%
of your total household income.
10.Employment
The majority of loan providers need to take a
look at your employment history so as to make
sure that you have a steady and stable income. If
you have a stable income then there will not be
any problems in getting the appropriate loan
amount.
11.Credit History
This is another factor which can positively or
negatively affect your home loan. If you have
good credit history you can easily obtain the
loan, while if you have bad credit history then
you may need to pay a higher interest rate for
your loan.
12.Know about Points
Points are one of the major fees charged on the
loan and they represent the profit earned by the
lending institution. Points are generally tax
deductible. One point means 1% of the total loan
amount.
13.Select Carefully Between Points and Interest
Rates
When choosing a home loan, a borrower has the
option of paying additional points in exchange
for a lower interest rate. Before making any deal
you need to consider a few factors. If you are
planning to stay in the house for a longer period
of term, at least 6 to 8 years, then choosing the
points will be the ideal option, this is because
the lower interest rates will save you more in
the long run.
14.Consider Sub-Prime Loans
These are loans which are exclusively designed
for those people who are burdened with credit and
financial difficulties. These loans are also
great for those who are looking to reestablish
their damaged credit. If you fall under any of
these categories it is a good idea to choose sub-prime
loans. Though the interest rates of these loans
are slightly higher than normal loans, these
loans help you to reestablish your damaged credit
history, or purchase a new home before cleaning
your credit history. Generally these loans are
offered on a short term basis like 2 to 3 years.
15.Consider a Portable Home Loan
A portable home loan is one which allows you to
sell one property and move to a new one without
refinancing your loan, that is, if you pay off
the old loan and take on a new loan. This will
save you a considerable amount of money, such as
no application fees and legal fees. However, most
home loan providers insist that the new home loan
amount required must be less than the existing
loan amount.
16.Get Professional Help
Even though websites offer buyers a large access
to home listings, it is still a good option to
seek the help of a professional. Look for an
exclusive buyer agent who can provide you enough
help with your home loan needs.
17.Shop Around
Many people are not aware of the importance of
shopping around to find the best home loan.
However it is quite essential to shop around as
it helps you to know more about the home loan
packages and interest rates offered by various
home loan providers. This helps you to select the
right deal.
18.Get Online Quotes
Nowadays most of the loan companies offer free
online quotes. Ask for online quotes from various
home loan companies and compare them to know
which one suits your needs the most.
19.Read Reviews
Reading reviews of websites which offer home
loans will help you to know what their previous
borrowers have to say about them. Reviews are
quite important as they are posted by those who
have previous experience with a loan company. Try
to read reviews before you select any loan
provider.
20.Search Online
An extensive search online will help you to find
the top online home loan providers. Don't go with
the first result displayed by the search engines.
Go through a few websites and read their terms
and conditions. Spend some time to learn more
about the company and its services and then pick
up the deal which suits your needs.
You are now aware of the top 20 strategies for
searching and applying for a home loan, so what
are you waiting for, apply for a home loan today.Author: Scott White
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