Finding the money needed to buy a home is almost always one of the most difficult obstacles new owners face. The most likely capital is usually your own savings, but most buyers turn to banks for getting the money to buy property. Since the economic downturn it has become harder and harder to qualify for a home loan with banks having stricter lending criteria and asking higher deposits. It is thus essential that you follow the right steps when applying for a home loan:
1. Become Credit Fit
To get credit fit you need to check where you stand regarding credit. Most people will tell you that debt is the root of all evil but in this case it is good to have debt so you can prove to the bank that you can make and repay debt. You can request a free copy of you credit report from the bank. It’s also good idea to increase your disposable income by consolidating debts to increase you cash flow.
2. Find a Mortgage Originator or Lender
The Internet is a great source of information and will help you find a good mortgage originator. Ask your family and friends for advice. Alternatively you can also get referrals from estate agents.
3. Fill Out a Home Loan Application
There are different types of home loans: a first time buyer’s loan, a variable home loan and a fixed home loan. Your lender will be able to tell you which one will suit you needs the best.
4. Budget for the Additional Costs
Think ahead when it comes to the amount you want to apply for. Transfer fees, closing cost and bank fees could come to a substantial amount so make sure you calculate them into you budget.
5. Compare Costs/Fees/Interest Rates
Once you’ve been to various mortgage brokers you can compare prices and interest rates to ensure that you get the best deal. Remember to consider everything before you make your decision.
6. Negotiate, Negotiate and Negotiate
Feel free to negotiate fees and costs as far as possible.
7. Provide Documentation
Get your documentation ready and present it to the originator on time. Make sure you are well organized by keeping all documentation up to date and ready to use.
8. Review Loan Papers
Once you’ve received the final papers you can compare it with the offer to make sure that it is the same quote.
9. Sign Loan Papers
When you are sure everything is in order you can sign the home loan papers and deposit money for the down payment. Take a cashier’s check to the closing and hand it over to the broker/lawyer/title company.
It is important to note that getting your first loan will always be the hardest, as banks prefer to lend money to borrowers who have borrowed at least once and have paid back at least one loan on time. Plan well in advance and make sure that you have all necessary information and documentation in order to speed up the process.
Author Resource:
Elizabeth works for South Africa leading online property portal - SAHometraders, advertising property for sale and to rent in all areas of South Africa. Visit http://www.sahometraders.co.za for more information
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