When you think of applying for home finance, you have to consider a variety of things, from your credit history to the repayment terms. So, it often becomes a somewhat strenuous process that requires proper planning on your part.
It is extremely important for you to discover maximum information before you sign the loan agreement. You must talk with your lender and discuss the details before finalizing the loan deal. Sure, it demands your precious energy and time, but it will prove to be rewarding in the long run.
Here are the top questions you should ask your lender while availing of a home loan.
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#1 What Is the Loan Processing Time and Disbursement Procedure?
Get to know about the loan processing time. Since it varies from lender to lender, you should ask your chosen lender to specify a tentative turnaround time. Also, make sure to get a detailed overview of the sanctioning process.
On what benchmarks they assess your home loan eligibility? What is the complete disbursement procedure? Seek confirmation on how much time they will need to advance the loan amount after the application approval.
#2 What Are the Additional Costs or Hidden Charges Associated With the Loan?
Lenders often charge some hidden or extra charges that you may not be aware of. Costs of a loan for buying a home might include third-party fees like a title policy, credit reports, appraisals, property taxes, etc. Thus, you must ask your lender to furnish a list of applicable extra charges.
Knowledge of hidden charges will let you get a clearer idea of the entire loan cost. This way, you can also better plan your purchase.
#3 What Are the Home Loan Interest Rates and Their Type?
You must learn about the various interest rates in detail and verify how the lender charges them. You can use a home loan EMI calculator online to get a clearer idea of the same.
In the case of a fixed-rate loan, you pay a fixed interest rate for the whole tenure. On the other hand, a floating-rate loan charges you a variable interest that changes periodically.
#4 Are There Any Foreclosure Charges?
You might be inclined to prepay your loan amount at some point of time during the tenure. However, some lenders charge you a prepayment or foreclosure penalty if you try to clear the debt before a specified period. Therefore, best to ask your lender about the same beforehand.
#5 What Will Be the Down Payment Amount?
Most lenders typically finance 90% of your residential property’s cost. And you need to finance the remaining 10% from your pockets. Once the down payment is determined, you can rely on a home loan calculator to check how much loan amount you can obtain and plan your finances accordingly.
To Sum Up
A loan taken for a home purchase is generally a long-term commitment, often lasting over a decade. Therefore, make sure you are zeroing-in on the product that aligns with your unique financial situation. In any case, asking your lender the questions mentioned above while taking a home loan home loan will help you make an informed decision.