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Whether it is a mortgage housing loan or any sort of loans which involves acquiring a property, everyone must know their way around or at least seek help from those who know about it.
In this article, we are providing you the basic elements of a successful housing loan application.
1. The Monthly PaymentTo get a house loan approval, you must have sufficient income . The monthly payment should be at most one-third of your monthly salary. If you fail to have it, it could make your application process for a housing loan more difficult. Banks generally do not approve loans that the monthly amortization of more than 30 percent of your gross monthly income.
An amortization schedule is recommended for you to to know how much your monthly payment will be. It could save you more time time and free yourself from the hassles of computations as the the amount varies with every payment.
An amortization schedule is a table with the details of the amount of each payment allocated to the principal and interest. Early in the schedule, the majority of each periodic payment is the interest. After that, the majority of each periodic payment is put toward the principal.
2. The Down Payment
Down payment is the amount of money you pay upfront when purchasing a home. It influences the home price you can afford. Generally, the banks require at least 20% of the appraised value of the property as a down payment. It is also a benchmark used to determine your maximum affordability.
Larger down payment makes your monthly payment and the interest you need to pay to shrink. Save and invest to accumulate the money you will need for a housing loan down payment.
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3. The Kinds of Interest Rates
When you are applying for a home loan, you can choose between fixed-rate and variable-rate terms. To make the best financial decision, it is important for you to know the difference between the two types of interest rates.
1. Variable interest rate- the interest rate varies as the stock market moves.
2.Fixed interest rate- the interest rate is the same from start to finish of the loan payment. It is always higher than the variable interest rate and looks seemingly attractive.
4. Loan Tenure
The total interest paid is directly proportional to the loan tenure. The higher the tenure, the higher the total interest paid, and vice-versa. However, when it comes to choosing your loan tenure, your affordability should be prioritized. A monthly amortization of more than 30 percent of your monthly gross income will be a really heavy financial burden.
It is very important to read all the documents carefully before you sign. Go through every single statement and have a full understanding. Don’t be shy in asking anything about your home loan application. Check every documents and make sure that the terms are the same as what you negotiated and agreed upon. In addition, you must know the different charges such as the processing fees, late payment fees, and the likes. Being cautious will keep you away from any trouble that could happen in the future.
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