Sunday, March 29, 2009

Buying a House via Home Loan

1. Look around. Love at first sight does not always work when scouting for a house. There are many borrowers who end up liking something else they see in their neighborhood and are stuck with the first one they jumped at. Not a good situation to be in.

2. Do a thorough soul-searching on your needs and what you can afford. They are not always the same, but even a tentative scribbling of preferences on a table napkin can significantly lessen the time needed to find that dream home. This will also help you determine whether you might be better off renting or buying your own home.

3. Double-check the integrity of the developer. If you are trying to take advantage of pre-selling prices, make sure the developer won't run away from its promises.

4. Make sure the property is free of liens. Home buyers who fail to double-check if the titles they are buying are clean and authentic end up with court cases.

5. Make sure your credit history is squeaky clean. Banks investigate character first above all things. Did you bounce a check? Abuse a credit card? All these things will show up in your credit report and can be reason for you to get declined.

6. Look for a bank that is customer-centric. Banks that understand their customers and value the relationship will give payment leeway when needed.

7. Can the bank decide on your application fast enough? Most banks have a five to 10 days processing time. This matters to consumers because they already have a pent-up need or they are worried someone else will snap up the property they are eyeing.

8. Beware of steep pre-termination fees. If you decide to pay off your mortgage loan ahead of time, you may get charged anywhere from one percent to 5 percent of the total loan amount.

9. Take the time to understand the terms and requirements. Most borrowers are too focused on interest rates and getting the loan approved that reading the fine print becomes too much of a chore. Big mistake. There are many other costs to taking out a mortgage loan like mortgage redemption insurance, which protects banks when you fail to pay.

10. Don't buy anything you haven't seen. A picture on the Internet may be worth a thousand words, but make sure you still check the property out with your own eyes, or that of someone you trust.

11. Think of your purchase as the stepping-stone for a better home. It takes a lot of guts to take the plunge and borrow a big amount of money. But if you know that this is not your last home, you're more likely to buy a house that you can afford.

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