In this article we will discuss What to think about before applying for a home loan. For a long time, you’ve wished to own a home sweet home. If you want to buy a house, the first thing that comes to mind is either a nice house or an unavoidable home loan. In the end, qualifying for a loan is the most important factor. Lenders must evaluate your repayment ability based on your earnings, expenses, savings, work profile, financial capacity, and repayment history in order for you to qualify for a loan. Poor credit scores and the ghosts of the past, such as credit debts or a poor payment history, can jeopardize your ability to obtain a home loan. Before you apply for a home loan, consider the following factors:
- Your credit score serves as the foundation for your mortgage application. This score is based on your track record of paying credit card EMIs on time and your dependability in this regard. The credit information report (CIR), which includes your credit score, is essentially an evaluation of your borrowings from various lending institutions such as banks, NBFCs (Non-Banking Financial Companies), and Housing Finance Companies (HFCs). When a loan provider inquires about your credit history, a reputable credit bureau prepares and keeps this information on file. A high credit score increases the likelihood of loan approval. Furthermore, the best interest rate on a home loan can be expected. Check your credit score at least six months before you decide to buy a home.
- Determine your budget, the amount of money you can put down as a down payment, and the amount of mortgage you may require. If your income appears to be adequate, home loans at 80 percent of the property value are usually available. Choose an EMI range that you can comfortably afford, as this will help you determine the length of the loan. Online EMI calculators can assist you in calculating EMI in a variety of ways. If your income is insufficient, including your parents and spouse on your loan application may be an option.
- Choose the right banks and lenders: Avoid applying to multiple lenders at the same time, as this can have a negative impact on your credit score. That doesn’t mean you shouldn’t weigh your options. Determine which banks or housing finance companies have pre-approved the property where you intend to buy a house, as this can shorten the time it takes for your loan to be approved. Understand the eligibility criteria of such lenders in terms of credit score cutoffs and loan schemes (processing fees, the rate of interest etc.). Choose one or two lenders who best meet your needs and get your loan approved with them before booking the property.
- Before going to a bank or housing finance company to apply for a home loan, you should understand what documents are required and make sure you have them on hand. The following documents will be required:
- Income Tax Returns or Form 16 for the previous 2-3 years to ensure that all taxes have been filed
- PAN Card – the lender will conduct a PAN Verification to determine its authenticity.
- Aadhar Card – In order to verify your identity, the bank will also conduct an Aadhaar verification.
- Bank statements for the previous 6-12 months for a bank account that shows your income and expenses. Make sure you’ve kept a reasonable balance in this account for the last six months.
- If you are salaried, please provide the last three months of pay stubs. Form of Application with Photograph, Signed
Considering all of the aforementioned points will help you prepare for your home loan and, as a result, increase your chances of receiving a quick home loan approval. If you are considering co-borrowers, make sure you prepare them to check their credit score and keep their documents handy.