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Home loan approval tips for first-time home buyers

By: f2cpvtltd

Everyone in this world needs a happy place, a place that welcomes them with open arms. In good or bad situations, which is built up from the memories of their loved ones that’s the place we like to call home. Having a home of our own has been one of a few monumental tasks one dreams of to fulfill in his lifetime. It is a high capital investment, needs commitment and hard work.

Many factors go into consideration when financing a house, and money is the most important one with various financing options today, it makes it a bit easier and faster to get the capital necessary to get our dream home. Though for first-timers it might seem a bit confusing and a lot of things go through their mind before they make one of the most important decisions of their life. So, we would like to provide some tips and suggestions to read so that you could be most educated while deciding what’s the best option available to you before committing to this huge responsibility.

1. Good Credit Score

A credit score is something that should be in your observation all the time especially when going for a huge loan. It is always advisable to maintain a good credit score as it shows how credible you are as a payer of your previous line of credit. It is easy to do and can Fastrack your chances of gets good benefits with your financing company.

2. Providing a Collateral: Home loan

Though this is a bit difficult for younger people as they haven’t accumulated such commodities yet. but if you are in a possession of collateral similar or Assumable to the amount of loan requested then considering it in your application will increase your chances significantly as it will assure the company that the money can be retrieved if a situation occurs of being a defaulter.

3. Get rid of existing debt

A company will always prefer the one with no or less debt than the one with huge existing commitments though a person which a history of debts has more credibility to pay off his loan. It is beneficial if you clear out your existing debts, which might seem difficult but can increase your credit score and your chances to get good interest from the company.

4. Provide true and credible information

It is very important to provide all the necessary financial and personal information before applying for a loan, it is also preferable to check for the Home loan policies and guidelines of the company, before selecting. Then to give all the correct and necessary information and to make sure they are UpToDate with the requirements. If your paperwork is neat and reliable a company would give you many more benefits in interest with loan and EMI options.

5. Choosing the correct policy 

The loan is going to stay for a long duration of time so it is better to choose wisely before going all in. The best way to do that is to practically understand your limits and paint a realistic picture that you can follow after which decide how much EMI you can afford considering your stability and future endeavors. This will not just help you manage your long-term needs but will also help in savings and short-term investments.

6. Making a big Down payment

Down payment here works as an investment and can bear multiple benefits. The bigger you have you’re saving the less money you have to pay back. When purchasing make sure to pay at least 20% of the total amount in down payment. This will put more assurance to the bank that you can return the borrowed amount. It also will reduce your interest rates hence you can afford a long EMI duration with less amount going per month or repay the amount faster with quick savings.

7. Best if Co-applicants

Co-applicants mean that two people are applying together for the loan it could either be you and your spouse. In case you are not married don’t worry your parents could be your co-applicant. How it benefits is that it combines the net worth of both the party and take it as one. If anyone earns a good income it could benefit both and will have a good impression on your lender. This will also make sure that the loan is paid faster with more stability. Suitable for those whose income alone is not sufficient to provide a good interest rate or getting approved altogether.

8. A clean account

The first impression is the last and for your loan request, your bank account will paint that picture for you. The first thing any lender or financing company looks at is the bank account history of 6-12 months before the request to understand your payment and expenditure pattern to deduce if you are capable of repaying the borrowed amount. So, make sure that you have your records straight and don’t have last payments or faults in transactions as it could be made or break for your loan approval chances.

9. Stability and Budget: Home loan

Nothing assures a lender more than a stable source of income from its borrower. It shows that you can manage to pay the required amount every month and over a long duration of time. But this doesn’t mean that you have to halt your dreams for that. This is where a proper budget comes in if you have maintained a proper realistic budget from the beginning it gives you more stability to change jobs and live off the saving for a while. Still, it is advisable to be in the same line of work so that the source of income doesn’t change drastically and the lender is assured while you do the things you love.

10. Getting Advice

Applying for a home loan for the first time is a stressful yet important decision to take as it affects your future economically and many other decisions. So, make to make sure that you take all the right steps and make an informed decision getting a professional adviser can always be a safe bet.

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