According to an article published in
The Economics Times on October 5, 2016, the Reserve Bank of India (RBI) has
reduced the repo rate from 6.5% to 6.25%. The repo rate is the rate at which
the RBI lends money to commercial banks, in case they run short of funds. It is
believed that this action will promote a good borrowing environment in the
country, especially for retail customers, which will ultimately increase the
demand for personal and home
mortgage loans.
Getting a home loan is not a bumpy
ride anymore. Here are some tips that can get you the best deal for the most
important investment of your lifetime.
10 Smart Mortgage Tips for Home
Seekers
- Work
on Your Creditworthiness
Nothing works better than your
creditworthiness when you are applying for a home loan. It is the valuation
performed by certain agencies, considering factors like repayment history and
credit score. If you're managing your current debt responsibly, paying your
bills on time, etc., then you are most likey to be eligible to for the desired
loan amount.
- Always
Save for the Down Payment
It is believed that paying 20% as down
payment on a mortgage is ideal. The down payment will highly affect you and
your family, so it is strongly advised to stay prepared.
- Seek
Advice from a Professional
It is not necessary to be an expert in
homebuying, instead look for assistance from qualified professionals. They will
answer all your questions about your financing needs too.
- Look
for the Best Mortgage Lender
Taking on a loan is much more than
just getting a favourable interest rate. You should get the loan estimates from
multiple lenders before reaching any decision.
- Understand
the Loan Types
A fixed-rate home loan doesn't suit
every home buyer in the same way that an adjustable-rate mortgage isn't right
for every home buyer either. An ideal situation is a 30-year loan, if you are
buying the house to raise a family. If you are opting for a 10-year loan, an
adjustable-rate mortgage is preferred, which is fixed for the first few years
and then starts reducing for the rest of the tenure.
- Consider
Preapproval
It is recommended to have your funding
preapproved even before you start looking for a house. After determining the
amount of money that you are qualified to borrow, your house-hunting process
will become much more realistic and fall within your budget.
- Nest
amongst Like-Minded People
Humans, being social animals, are
highly affected by their surroundings. Interestingly, your house plays a key
role in all aspects of your life. Consider the community, extracurricular
activities and nearby facilities before narrowing down your search.
- Don't
Forget Your Budget
You have to take into account the additional
burden of monthly expenses on other non-negotiable expenses, such as property
taxes, insurance and other household expenses. Stick to a budget when
finalizing a home mortgage loan.
- Negotiate
on Closing Costs
When you receive the loan estimate after
applying for the mortgage, you'll get a rough idea about the closing costs or
“cash to close”. Hence, shop for the best closing costs.
- Strengthen
your Saving Account
It is not wise to spend your savings on down payment or closing costs, ignoring emergencies. A golden rule is to save money worth 3 to 6 months of your living expenses beforehand.
