A home loan is a type of loan in this home is used as collateral by borrower. These loans are useful to help finance home purchase, major home repairs, etc.
Look carefully and bargain hard: Now a days there are many banks and there is a competition in home loan business. Before making final decision about loan, borrower should investigate at least 5 banks carefully. Make sure that you bargain while making final decisions. Borrower can get out of extra processing fees, in addition to higher interest rates.
Tips for the first time home loaner: Borrower should be careful while reading fine print on the loan agreement. He or she can consult the lawyer to learn more about the details.
- Borrower should analyze whether is he/she is eligible for size of the loan, when taking a loan.
- Loan eligibility calculation is based on cost of the house and borrowers ability to pay.
- Borrower can convince the bank to increase eligibility by showing the track record of credit card history or previous loan.
Documentation: It is important to get the receipt for keeping the documents, which you keep in the bank. This is useful proof because if bank misplaces any of borrower’s documents then borrower can switch the loan to another bank.
Fixed and variable rates: Borrower should check whether it is fixed rate of interest or variable rate of interest on loan, if it is fixed rate then he should check if the rate is fixed for the entire period of loan or just some years. It should be checked that if there are any loopholes that may permit banks to change fixed rate and also should check when interest rates are going up.