Tips To Keep in Mind While Taking a Home Loan

By admin On April 6, 2010 Under home loans

Everyone yearns to have his own home no matter how hard it is to get one. Different people buy it for different purposes; some buy it for luxury whereas some others consider it as an investment in order to earn returns from it. With real estate agents present in every nooks and corners of the city, finding your dream house has become quite easy. Our daily expenses are so high that only a few people can afford to buy a home with ready cash. Hence, most people make use of a home loan to purchase new home.

If you are not well-versed about home loans, you may end up paying thrice or four times the actual price of your house to your mortgage lender. Here are some tips that you need to keep in mind while taking a home loan:

1. Mortgage lenders provide mortgage to home buyers for duration of 15 to 30 years. The more time the home buyer gets to pay his loans, the better he will feel to manage funds to repay the loans. Every month while making the monthly payment, the home buyer also has to pay a high interest rate. Keep in mind the more time you take to repay the loan, the much you will be spending on your loan. For example, a home buyer with a mortgage period of 20 years will be eventually spending more at the end of the mortgage period compared to a home buyer who has a short mortgage period like 10 years.

2. If you wish to prepay your home loan, you should go for a loan with fixed loan of interest as it allows you to plan and mange your finances in advance for certain duration of time. It helps in lowering the interest rate.

3. If you wish to transfer your loan from one lender to the other that is providing a comparatively lower interest rate, you should go through the deal before you go ahead with it. Your existing mortgage lender will ask you to pay pre-payment charges while closing a loan. The mortgage lender to which you are planning to transfer your loan may also ask you to pay processing fees or mortgaging fees depending upon the total loan amount. The amount of money that you provide to the preceding mortgage lender as pre-payment closure fees is not combined with principal of the home loan that you acquire from the other lender. This way you will end up paying more amount of money unnecessarily in the form of interest.

4. Do not shy away from looking into the details of your mortgage calculations even if you are weak in math.
Try to stay abreast with the market trends and read articles and magazines that provide information on home loans. Alternatively, you can seek assistance from a mortgage advisor to help you make the right decision in order to save money on your home loan.

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