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What You Should Know When Taking Your First Home Loan


Thinking of buying your first home but not quite sure how to go about it? You will not be the first or the last and therefore it’s in your best interest to understand the basics of a housing loan and the various aspects of getting one without getting into a financial mess. The downturn in the economy has made it even worse with lenders being very careful as to whom they are giving them money, resulting in very strict guidelines being laid before a loan is approved.

first home loan

Getting a housing loan has everything to do with your credit rating and how good or bad it is. Someone with a poor credit score will find it much more difficult or impossible to qualify for a property mortgage whereas good credit means making it easier to get a loan. What you must understand is that a property mortgage involves more than the value of the property you’re hoping to buy. There are additional fees that have to be paid for the transaction, for documentation, etc. and all these must be taken into consideration when planning the loan.

Rate of Interest For Your Housing Loan

The rate of interest that has to be paid on a loan can be considered the most important aspect when looking for a company from which to take your loan. Finding a lender that can give you the cheapest rate therefore is of the utmost importance if you wish to save as much as possible in the long run. A few points can make a huge difference and that is why you should be very much on the alert to check out what the ongoing rates are for housing loans.

Getting your loan and paying the interest every month is well and good. But you must be alert to the changing market and check the current interest rates to gain its benefit if it becomes low. Some people just don’t bother to look around and see what other lenders are offering. If they do, they might realize that others are paying much less interest than they do. In such a situation, you should always confront your lender and ask him for a reduction in your rate or threaten to take your business elsewhere.

Go For Reliable Housing Loan Lenders

Beware of lenders that quote low-interest rates in the hope of drawing you into the trap of offering you a housing loan. What they don’t tell you is that this amount would be higher once extra costs such as upfront fees and other charges are added to the total amount. You should therefore take the time to check and compare the Annual Percentage Rate offered by other companies to get the factual results of the amount you will be expected to pay so that you will not be caught on the wrong footing.

Knowing the correct facts and figures as well as the procedures will be one way of keeping the lenders on their toes when they realize that you cannot be palmed off with amounts that are not factually correct. Some lenders for instance will quote a low interest rate hoping you will be happy with it without informing you that the total amount to be paid will be much higher once the additional costs and fees are added up. Being sure of your figures will help you to look for property within your price range without wasting time. When taking a housing loan you should also find out the various tax benefits you’re entitled to as a first-time property buyer.

A Few Guidelines To Help You With Your First Housing Loan

A housing loan may be the very first loan a buyer takes out to purchase his new home. This could be a bit of a challenge for the uninitiated and is well educated on the subject that will help him when it comes to seeking a housing mortgage. With the economy down in the doldrums, most lenders have become wary of proving loans resulting in very few applicants qualifying for the cheapest interest rates while most not qualifying at all.

How To Quality For A Housing Loan?

To qualify for a housing loan, the loan lenders will expect the buyer to have a good credit rating along with a reasonable income to debt ratio. Those in the market for a property mortgage loan with low credit scores will not find it easy to get a loan approved, although this is not impossible. One thing you should be aware of is that your expected cost of housing should not go beyond 30% of your monthly income before tax. Furthermore, apart from the loan itself, there will be additional charges related to the acquisition of the loan which should be taken into consideration when applying for a housing loan.

The interest that has to be paid on your housing loan can make a big difference in the amount you can save. Even a fraction of a percent reduction in the rate of interest can mean a big saving long term. If you’re currently in the market for a new mortgage, it pays to keep tabs on the current rates to make sure you’re getting the best rate possible. People who take out housing loans generally tend to forget all about it once the loan is theirs. The monthly premiums are automatically paid through their bank accounts or paychecks while they least bother to check what the current rates are.

Housing Loan For First Time Home Buyers

Most of them are unaware that there are numerous deals for first-time homebuyers such as fixed interest rates, capped rates, early discounts, etc. By keeping tabs on the market rates and what other companies are offering, you will know how high or low your rates are. If you feel that your lender is not giving you a good deal while others are offering more competitive rates, you have all the right to confront your housing loan lender. By doing so, you’re much more likely to get a better rate since they would rather bow down to your demand than lose you as a customer.

Never take out a housing loan without comparing the APR (Annual Percentage Rate) of other lending companies. This provides you an opportunity to see the different rates and terms offered by various lenders inclusive of upfront fees and other charges that are sure to be added to the premium. Loan providers are more than likely to attract you by quoting low interest without mentioning the hidden extras that you will come to know only after signing the agreement. So be aware of this.

This will not only give you the true figures to play around with in keeping with your budget, but it will also let the housing loan provider know that you cannot be fooled with bogus statistics. Additionally, you will also have a good idea as to the price bracket in which you should look when applying for a housing loan since this will help you to save time by looking only at properties that are within your means. Don’t also forget the fact that a housing loan will also entitle you to certain tax benefits such as property taxes, loan interest payments among others that are very often tax-deductible. So you should need more information about a housing loan before you set yourself to go for applying one.

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