10 Tips To Get The Best Loan Offer
Do not chase the cheapest rate of interest. Find out a competitive rate and focus on the other aspects of the loan. Cheapest is not the best deal so look beyond it.
- Choose a floating rate of interest over fixed, even if the latter has an attractive rate offer. There will be twists in fixed products. Many of you miss to note that there’s a foreclosure penalty applicable within the fixed term. And moreover, the margin changes after the fixed period is over, if the offer rate was for teaser period.3. Ensure you opt for a lender who offers daily reducing balance and not monthly. It will not make any difference unless you plan a partial repayment. In a monthly reducing balance plan, even if you partially close an amount in between two EMIdates, they consider the repayment only from the next EMI date, thus making you pay interest even on the repaid sum for those days! You will not know, but it will cost you heavy.
- Do not get biased by Parajumpers Right Hand Herr your previous experience with another product, or what your friends, relatives & colleagues. This is finance, a pure mathematical product, so do your maths & decide accordingly.
- Read all online remarks, which you will anyways do. But 99% of them are otherwise motivated. You will find that those who are badmouthing a lender probably use funny dummy ID-s like kingpin, lisahayden, bigboy, greatguns, etc. So before taking their comments seriously have a look at the IDs they’ve used.6. Your wealth manager, bank relationship manager, chartered accountant, tax-planner and your finance controller or CFO in officeare great. Seek their guidance to reach the right mortgage broker. Mortgage is a specialised product. Have you ever heard a heart surgeon treating patients for skin rashes? Similarly, a mortgage brokerselling mutual fund and insurance will be as good as a real estate broker selling tour-tickets and running an STD shop with photocopy machine! Therefore, chose the best in industry.
- Try opting for a new-age product which saves you money. Standard vanilla home loan are cliche’ and won’t work for most of my clients who have surplus funds and taking the loan for tax-savings or waiting another property to be sold and pay off their debts. These days, borrowers have various requirement rather than just borrowing for the need of money.
- Look at the service perspective carefully; you are getting into a long-term relationship. Don’t jump on the first lender approaching you or the lowest rate of interest or may be, what your friend’s father suggests. You will need a lot of services like- tax certificates, provisional amortisation, list of documents, part closure services, reduction in the tenure/EMI upon partial repayment. If you are going to continue a loan for a long term, there may be a requirement of change of address if as you may shift from one city or country to another. Therefore, never compromise on the aspect of post-sales service.9. Always ask for a comparison between at least 6 major lenders from your mortgage adviser. And again, do not decide on basis of the lowest rate. Look at the base rate, the margin offered, whether any other product is being pushed, how many times the lender has reduced rate in past two years, what is the maximum tenure offered, and how is the eligibility calculated and most importantly whether a property similar to yours has been funded by this lender earlier.
- Time taken for processing the loan. This may sound unimportant, but my noting it last doesn’t indicate that at all. When the builder starts sending you delay-penalty notices or the seller withdraws from the deal or increases the sale value, trust me, this becomes the top priority on the chart. What will be the point of checking out so many lenders and settling for the one who can only offer, but cannot execute?
Here are some tips to help make finding the right home loan as easy as possible.
- Tip #1 – Start saving for a down payment. …
- Tip #2 – Check your credit score. …
- Tip #3 – Get your financial documents in order. …
- Tip #4 – Utilize a mortgage calculator. …
- Tip #5 – Learn how to compare offers. …
- Tip #6 – Start tracking interest rates.
Top 10 Home Loan Tips
Buying a home can be a fun and exciting experience. But finding the right home is just one step in the process. Choosing the right home loan can be just as important. Here are some tips to help make finding the right home loan as easy as possible.
Tip #1 – Start saving for a down payment
Depending on your lender and the type of loan you choose, your required down payment can range from 2.25% to 20% of the purchase price of the home. Establishing a monthly budget will help you put away enough money for your down payment.
Once you’ve assessed what your budget will support, consider having money automatically deposited from your paycheck or bank account to a savings account to make it easier and more convenient to put aside money each month. An account like Discover Bank’s AutoSavers Plan can help you start saving today.
If you won’t be able to come up with a large down payment, then you should look into an FHA loan, which helps home buyers who can only make a small down payment.
Tip #2 – Check your credit score
Having a good credit score puts you in a position to attract the best deal on your home loan. So it’s a good idea to obtain a copy of your credit report before starting the home buying process. You will see what your credit profile looks like to potential lenders and can then take steps to improve your credit score if necessary.
You can receive one free copy of your credit report each year from each of the three major credit reporting agencies – Equifax, Experian, and TransUnion – by visiting If you pay a small fee to the reporting agency, the credit report you receive will also include your credit score.
Tip #3 – Get your financial documents in order
When you apply for a mortgage, you will need to provide your lender with a number of financial documents. Having these documents already assembled will help accelerate the processing of your loan application. At a minimum, you should be prepared to provide your last two pay stubs, your most recent W-2, your last two years of tax returns, and current bank and brokerage statements.
Tip #4 – Utilize a mortgage calculator
Mortgage calculators are great tools for helping you understand how much home you can afford. They are very easy to use and can show you how much your monthly mortgage payment would be under different home price, down payment and interest rate scenarios. Check out a variety of our handy mortgage calculators.
Tip #5 – Learn how to compare offers
All mortgages are not created equal. Even if loans have the same interest rate, there could be differences in the points and fees that make one offer more expensive than another. It’s important to understand all of the components that go into determining the price of your mortgage, so you can accurately compare the offers being made. You can click here for a good explanation of the components of mortgage pricing.
Tip #6 – Start tracking interest rates
The interest rate will be one of the biggest factors in determining the cost of your mortgage. Interest rates for mortgages change almost every day and it is helpful to know which way they are heading.
Tip #7 – Get pre-qualified
Many real estate agents want you to be pre-qualified for a loan before they will start to work with you. The mortgage pre-qualification process is fairly simple, usually just requiring some financial information such as your income and the amount of savings and investments you have. Once you are pre-qualified, you will have a better sense of how much you can borrow and the price range of the homes you can afford.
Tip #8 – Understand the various loan options
Maybe your parents had a 30-year fixed-rate loan. Maybe your best friend has an adjustable-rate loan. That doesn’t mean that either of those loans are the right loan for you. Some people might like the predictability of a fixed-rate loan, while others might prefer the lower initial payments of an adjustable-rate loan. Every home buyer has their own unique financial situation and it’s important to understand which type of loan best suits your needs.
Tip #9 – Be prompt in responding to your lender
After you have applied for a home loan, it is important to respond promptly to any requests for additional information from your lender and to return your paperwork as quickly as possible. Waiting too long to respond could cause a delay in closing your loan, which could create a problem with the home you want to buy. Don’t put yourself in a position where you could end up losing your dream home, as well as any deposit you may have put down.
Tip # 10 – Don’t mess up your credit during the loan processing
It’s not uncommon for lenders to pull your credit report a second time to see if anything has changed before your loan closes. Be careful not to do anything that would bring down your credit score while your loan is being processed. So, pay all of your bills on time, don’t apply for any new credit cards, and don’t take out any new car loans until your home loan has closed.