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Factors To Consider When Choosing Your Home Loan
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As a first time home loan applicant, there are a number of factors one needs to consider when applying for a home loan. Since it is a long term loan, the burden of repaying it will take a number of years. All home loan borrowers are advised to plan their finances in advance. Any defaults in the loan can affect a borrower’s credit score. Also, if an individual is unable to repay their loan, the financial institution will seize their home and resell it to recover the loan amount. If you wish to buy the house of your dreams and keep it, the following three factors must be kept in mind:
Loan application process
A home loan applicant must always consider financial institutions that have a relatively easier home loan application process. In some cases, the application process can become extremely drawn out which makes it difficult for the individual to purchase the house of your dreams in time. Also, it is important for a borrower to find out if the financial institution charges any additional fess besides the actual repayment of the loan amount from their borrowers. Certain financial institutions may have clauses which require the borrower to pay a fine if they repay their loan in advance. A borrower must try to select a financial institution that does not charge any additional fees thus making the loan more affordable.
Home loan interest rates
Most financial institutions provide their borrowers with options when it comes to home loan rates . The most common options available for each borrower are fixed and floating interest rates. Fixed interest rates means that the interest the financial institution charges on the loan remains the same for the entire tenure of the loan. A floating interest however, changes based on the changes in the market rates and thus are an option one must consider if they are willing to take the risk to get a more affordable EMI. Based on the borrower’s requirements and expectations, they must decide which type of home loan rate is suitable for their needs.
Tenure of the loan
The tenure of the loan plays a major role in choosing the home loan for a borrower. A borrower must decide how long he wishes his tenure to be since a longer tenure put a strain on him during the repayment process. A shorter duration however will mean that the EMI charge each month will be higher.
It is extremely important for an individual to study the types of home loans offered by different financial institutions and the kind of home loan rates one can expect. This will help make the decision process and simpler and ensure that you get a home loan that fits your needs perfectly.
Author Bio :
The author is a seasonal writer on topics of finance and the home loan sector. Through her writing, she articulates aspects that are important to people availing facility such as home loan interest rate, documents, home loan eligibility criteria that help to make the best decision.
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