For many people, buying a home for the first time marks a memorable and significant milestone. This is because a home investment is a way of reaping benefits. If you are buying a new home on Movoto.com listings, the banks can provide you with beneficial and lucrative mortgage options.
Mortgages are financial assistance that people get when they’re strapped for cash. With repayment tenure options and equated monthly installments (EMIs), lending institutions can help you have a dream home. However, before you get started with the application process, be sure to go through the below rundowns to simplify your application and loan repayment processes.
- Interest Rates
Basically, there are major types of interest rates that are provided by non-government and non-banking financial companies. These rates are floating and fixed interest rates. Floating rates refer to debt instruments that fluctuate depending on the market index or conditions.
On the other hand, fixed rates are interests that remain unchanged, even when there are oscillations in the market. However, most borrowers prefer floating interests because they are more beneficial than fixed rates.
- Reason for the Loan
You can easily earn points of getting a mortgage when you’re purchasing a ready-made home. Homes under construction are regarded as risky because there are possibilities that builders may fail to get approvals from the government agencies.
With the internet, you can access a lot of information on mortgage options before sending an application to any bank. Your research must include main factors, which formulate loans; these are:
- Repayment tenure
- Down payment
Basing your research on these factors, you can choose the best mortgage with an attractive interest rate. In addition, mortgage amounts are large compared to other loans. Thus, it will be important to uncover and explore every detail, which is necessary for your mortgage application.
- Credit History
Credit scores are determined depending on your borrowing behavior and payment history. When applying for these loans, be sure to first check the score of your credit. If you have a high score, there is a high probability that your mortgage will be approved with better interest rates.
Though, with backed loans from the government like VA, the requirements of credit scores are more relaxed. For instance, there’s a chance of you getting VA loans with 500 as a credit score.
- Unusual Properties
Most mortgage lenders prefer having an assurance that they will get their cash back if you dishonor their repayment agreement. At the same time, these lenders don’t prefer issuing loans against hard-to-sell or unusual assets. Such properties that lenders avoid include apartments on top of commercial premises, such as:
- Bars and cafes
- Old buildings
- Homes with non-standard materials like steel or concrete
- Negotiation on Rates
Nearly all the lenders provide loans with different rates as per RBI guidelines and their policies. Therefore, it’s recommendable to compare and check these details before confirming the best interest option provided by lenders. Low rates don’t always indicate that borrowers will benefit from them. Because of that, borrowers have to check some hidden charges that are attached to interests like pre-payment fees and processing charges.
- Mortgage Insurance
This refers to coverage, which protects lenders if borrowers pass away or default their repayment plan. Most lenders prefer having mortgage insurance when borrowers put 19% as a down payment. You may avoid the insurance by paying high-interest rates or making high down payments.
Most lenders will want a steady flow of income before they approve your mortgages. However, a self-employed borrower may find it difficult to qualify for this loan, because many lenders term irregular earnings as a big risk.
Self-employed individuals can only have their loans approved if they have a lot of savings and high credit scores. These prime aspects will help lenders approve your loan because you’re a lower-risk applicant.
Every mortgage can only approve your loan when you prove your identity through various documents. Hence, ensure you update your passports and confirm the address details of your driving permit. Other documents that may show proof of your address include:
- Utility bill
- Bank statements
If you are employed, you will need to present pay-slips with transactions of two years or more. In addition, the HR department of where you work should be in a better position to provide the same documents like you presented.
Borrow Mortgage Successfully – the Bottom Line!
Buying a dream house can be overwhelming, especially when you don’t have enough cash. However, with many credit and lending options, it can be easy to acquire a mortgage with attractive interest rates. For you to acquire this type of loan, you need to meet all the requirements of lenders, including a good credit score, proof of identity, and pay-slips.