Buying a home was once a dream of a lifetime. But with various financial institutions offering different home loan programs, it is not a difficult task anymore. However, the difficulty may lie in finding the right home loan. Here are some tips that will be helpful as you set forth to acquire a home loan that suits you best.
Tip 1 : Maximum Down Payment The down payment is the key to reducing your monthly payments on the home loan. More the amount you pay as down payment, lesser you will have to pay off every month. So it is recommended that you keep at least some percentage of the principal loan amount with you before you start looking for a home loan.
Tip # 2 : Additional charges with the home loan fees Once you've saved up the deposit for a home, don't forget to take into account all the extra fees that come with buying a house - some or all of these: stamp duty, legal costs, disbursements, mortgage insurance, pest inspection report, survey report, builder's report, strata inspection report, loan application fee, valuation fee, registration fee, sundry fees like refinancing or switching fees along with the down payment that you make on the home loan.
Tip # 3: Options and Interests There are various home loan programs which may confuse the borrower as to which is the right one for him. By all means, the borrower can seek the help of a professional consultant who will help him understand the pros and cons of each loan program. There are fixed rate programs which might seem like a great option when interest rates in the market are rising. However, they might seem like a drag as they cannot be altered later on without paying a huge penalty and you have to pay the same interest for a long time to come.
Floating or adjustable rate mortgages are an option that is great for people who are looking at short term mortgage loans. The rate keeps fluctuating along with the market interest rates. So it might jump or plunge depending on how the market is performing.
Tip # 4: Get Multiple Quotes You need to compare quotes from several different lenders before you sign up for a single home loan program. Thus, it is necessary to find the home loan program with the lowest monthly payments as well as the most flexible options.
Tip # 5: Statement Errors Even a minor error in the loan statement can benefit the lender and harm you as the borrower. So you need to check your statement quite regularly for any errors. The error might be as simple as an incorrect entry but that can rob you of a few thousand dollars and deprive you of the home loan.
Tip # 6: Beware fixed rates Fixed rates may seem attractive when interest rates are rising. The fixed- rate home loans locks you in for a fixed term and thus are less flexible than variable- rate loans. You may not be able to make additional repayments or pay the loan out early without facing high penalty charges.
Fixed rate loans suit borrowers who really value the certainty of knowing exactly what their future repayments will be.
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