Owning a home can be easy if you decide on opting for a home loan from a well reputed and experienced financial institution. This loan offers multiple benefits which include tax deduction, credibility, good credit score and life time security. Investing in a home also offers benefits in the long run as property prices rarely take a plunge. You find the prices rising constantly. You can also consider this as a long-term investment, a saving.
It is beneficial and advisable to have some understanding of this loan so that you can choose in accordance to your requirement.
*Land Purchase loans:
The land purchase loan is for specific purpose of buying a piece of land where you intend constructing a home. Most banks offer almost 85% of the price of land as a home loan. This buying of land can also be used for the purpose of investment.
*Home Purchase Loans:
The above mentioned loans can be used not only to buy a new house but you can also use it for buying a house from the previous owner. You are offered almost 85% of the price of the home according to market value. You have a choice between the fixed rates of interest and the floating rates of interest with this home purchase loan. You need to approach a bank or a reputed financial institution for the required loan.
*Home Construction Loans:
The application process for the home construction loan is different as compared to the other processes. This home loan is specifically offered to those looking to construct a new home. The land on which the home needs to be constructed needs to be bought within one year. This leads to the price of land being included in the home loan. The lender decides whether the loan can be taken in one single installment or part payments over a period of time.
Process of Home Loans:
- Pre-Approval of Mortgage:
For that smooth buying experience it is advisable to decide on a pre-approval of the home loan. Real estate agents ensure of the loan pre-approval before catering to any requirements. You need your credit report and the credit score from the three bureaus. It is only after the lender goes through the credit report and score will he decide on the amount you can borrow. These pre-approvals also help convincing the seller of your intentions.
- Organized Manner:
It is important that you have all the required documents in place even before the pre-approval. This is definitely getting rid of any tensions.
- Loan Application:
Finding out the exact requirements for applying for a home loan is essential. Different lenders and financial institutions have different requirements. Basic requirements include detailed information on employment, income, debts, assets, financial blemishes and property. You also need to specify the type of home loan you are looking for.
Only after the documents are analyzed, the lender can decide on the loan estimate. This home loan estimate can determine the interest rate, closing costs along with the monthly payments.