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How Can You Avoid Mistakes While Applying For Home Loan?
Home loans are serious financial commitments that have life-altering potential. Hence, they should never be considered in lighter vain or without paying their due attention and patience. There are a few common scenarios when you might have external financial assistance from banks. One of them is when you are all set to buy a new housing property. But due to the lack of necessary funds, you choose to resort to home loans. There's no shame in applying for home loans to achieve your dream house. However, you must wholly prepare for a roller coaster ride.
Financial experts and realtors suggest that prospective buyers who weigh their chances to apply for a housing loan must first take precautions. If you take the right step at the most appropriate time, you will be able to play safe and get that sweet cash from the bank. It is also essential to mention that you must never consider applying for a home loan due to external influence. Your primary reason must always be to meet the financial requirements for purchasing your dream property instead.
... that you have done your study on all the possible tips and tricks that you must follow before applying for a home loan, it’s only natural that you should also learn about some common mistakes in this spectrum. Here's a detailed breakdown of some common mistakes that you must not repeat while taking a home loan.
Not Ready with Enough Amount as Down Payment
This is one of the most common mistakes that more people are doing nowadays than ever before. For most people, the general idea is to buy an under-construction property for a proportionate down payment, with banks or financial institutions paying the maximum amount on their behalf. This is a wrong notion as these lending parties will first look at your financial standing to evaluate your repayment ability. Similarly, if you plan to borrow the amount from your associates or friends, they are likely to ask you to provide details of your financial condition.
The best option for you is negotiating with the bank to get the maximum amount at a competitive rate. Your negotiating skill will ultimately determine the loan cost - the rate of interest for your home loan is often set on your repayment capacity. Furthermore, there are also options for negotiation in processing fees, legal fees, other hidden charges and costs, and free documentation. Pursuing this method will help you to save finance while getting a loan at a lower ROI.
Choosing Between Fixed or Floating
Another common mistake that individuals often fall trap into is choosing between a fixed or floating rate of interest for the home loan. Every home loan applicant gets the option to choose between the above-mentioned two options. For simple understanding, a fixed rate of interest means that the ROI will remain as promised during the loan, irrespective of the changes in future years. However, the floating rate will provide convenient flexibility with the interest rate maintain a thorough co-relation with the RBI.
If the individual is applying for a short-term loan, something between five to seven years, they must consider the former option. Whereas if the plan is to make the payment in twenty years or more, switching to the floating rate of interest will make more sense. This will help the applicant as it’s hard for anybody to predict the changes for such a prolonged duration.
Not Buying Any Life Insurance Policy
Home loan repayments can often become a lengthy financial commitment. And it could become more of a hindrance than a help for your family if you end up with an accident or a medical crisis. It would be best if you took a life insurance policy so that you can future proof your family. They will be secured financially and won't find any need to arrange money for your medical emergencies. Most people don't consider their long-term while signing up to heavy financial commitments, thereby leaving their family in a brief gamble. It is better that you get yourself insured before deciding on a home loan.
If you can manage to steer out of these common mistakes, you will have a smooth experience applying for a home loan.
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