subject: The Chicken Or Egg Approach To Obtaining Home Loans [print this page] The Chicken Or Egg Approach To Obtaining Home Loans
People often want to know what happens first - do you first search around until you find your dream home and then get a home loan, or do you first make application for a house loan and then begin looking around?
In my opinion it would seem sensible to first make application for a mortgage loan to see the amount I actually qualify for, before beginning with the big house search. It would make no sense falling in love with the prettiest, perfect house ever. just to learn that I only qualify for a third of the loan amount!
However, in order to actually make an application for home loans, a bank or other lending company would require seeing an offer to purchase. This document is affirmation that you are really considering purchasing the home for which you want to obtain a home loan for.
Should you consider the above, it really is a catch 22 situation. You can not set your heart on a house unless you know very well what the size of your awarded mortgage will be, but you cannot determine what your actual home loan amount will be without choosing the home first. It is really an instance of which was first - the chicken or the egg?
Fortunately, it is possible to at least get a general idea of the home loan amount you qualify for. There are many home loans calculators available on the internet which can assist you with a basic calculation. You only need to enter your total income per month, the interest rate at the moment and the period you want to pay the loan off over, and you will be given 2 figures: The maximum amount you are eligble for and your monthly bond repayment should you decide to obtain the maximum loan.
This is nevertheless no guarantee that you will be awarded the home loan. A mortgage application is quite a long process and everything from your month to month expenses to your credit record and criminal history get investigated in the finest detail.
Some finance institutions offer the option of pre-approval for home loans. They will basically complete the complete home loan application with you, and once you are approved for a certain amount you have a specific time frame in which to find and purchase a house.
As with all other things that cost a lot of money, you should do proper research beforehand. Not all lending institutions will offer you the same interest rate for instance. Some will suggest a fixed interest rate and others an adjustable interest rate. Other organizations might offer you a payment holiday (where you do not have to pay for a number of months in case of unforeseen circumstances), other institutions will frown at the idea.
The most important thing is to select a well-established home loan company to assist you with this thrilling purchase. Speak to friends and family and get a number of referrals before making your choice. Buying a property is a huge responsibility - make sure that you are completely prepared!
