There is no greater joy than having your little place on the planet. Owning a house and making it your home is a dream to behold and envision. In terms of its economic value, it is an appreciating asset and a great source of investment.
According to a report of GlobeNewswire, published in August 2020, based on the figures of banks and NBFCs, economic experts predict that the home loan market of India is expected to grow at a CAGR (Compound Annual Growth Rate) of 22% during the year 2021-2026.
The reason for this rate, even during a pandemic, is anticipated as the growing urbanization and affordable mortgage loans. Many financial institutions even offer pre-approved mortgage loans to their customers.
If you wish to apply for a mortgage loan and are considering a pre-approved offer – these are some factors you should keep in mind.
- Know your Credit Score
Your credit score is an indication of your financial health. It is the score that is considered by lenders in deciding your ability to pay. A score of above 700 is preferable. Ensure that you pay your bills on time, you are regular with your installment payment, and do not make too many applications for any loans. This will help you to maintain a high and respectable credit monitoring company.
- Interest Rate
As pre-approved loans are offered after the lender has checked the buyer’s financial ability and calculated basis the information available to them, the mortgage loan interest rates are highly negotiable. Multiple players in the home loan segment have ensured that borrowers get the best deal and hence, before accepting a pre-approved loan offer, discuss and negotiate on the interest rate quoted.
- Documentation
Always keep all the required documents ready. Your KYC documents, income papers, bank statements, tax returns, property plans, etc. are some of the documents required for the loan process. Lenders require these documents to establish your identity, citizenship, age, address, job security, income levels, etc.
- Pre-approved amount Vs. Property Value
The value of your pre-approved mortgage is determined by your income level. It is offered before you zero in on the property you wish to buy. Hence, there would be a difference between the amount offered as a pre-approved loan and the amount you need to buy your home. Hence, always consult your lender and understand the options available for you. It will help you to choose a property within your budget.
In conclusion, arranging finances to buy a home can be a tedious and difficult process. It can be a financial strain to budget such expenses. Thus, pre-approved mortgage loans act as a huge relief as they have already evaluated basis your income and financial worth. Select 3-4 properties that you think fit in your budget. Compute how much finance you already have and how much you need. Post this, always have a transparent and honest discussion with your lender to understand any covenants attached to the offer. You must ensure that you consider all the above factors so that the process is smooth and prompt.