Jaksha Shah asked:


There are many types of home loans available in India offered by various Banks and Housing Finance Companies like:



Home purchase loans : Loan for purchase of a house.

Home improvement loans : Loan for repair works and renovations in a home already purchased.

Home construction loans : Loans for construction of a new home.

Home extension loans : Loans for extending or expanding an existing home.

Home conversion loans : Loans for those who have financed the present home with home loan and wish to purchase and move to another home for which some more fund is required. Existing home loan is transferred to new home without need of pre-paying the previous loan.

Land purchase loans : Loans for purchasing a land (plot) for both home construction and investment purpose.

Bridge loans : Loans are designed for people who wish to sell the existing home and purchase another. The bridge loan helps to finance the new home until a buyer is found for the old home.

Balance transfer loans : Loan to help you to pay off an existing home loan and avail the option of a loan with a lower rate of interest.

Refinance loans : Loans to help you to pay off the debt you have incurred from private sources like relatives and friends for the purchase of your present home.

Stamp duty loans : Loans for paying stamp duty.

Loans to NRIs : Loans for NRIs wishing to build or buy a home in India.



 

Why one should take a loan ?

 

The loan not only gives you tax benefits, it gives you the facility to repay the loan in EMIs. Both principal as well as interest paid attract tax benefits.

 

But the loan does not come free.

 

Other costs are involved.

 



Processing charge : It is a fee payable to the bank or hosuing finance company at the time of applying for a loan. It may be a fixed amount or may also be percentage of the loan amount.

Pre-payment penalty : When loan is paid before the expiry of the agreed duration, the person has to pay penalty fixed by the company / bank and it may 1-2 % of the amount being pre-paid.

Commitment fees : Though not all banks / companies, many banks / companies levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.

Miscellaneous charges : Some lenders may levy a documentation or consultant charges.Registration of mortgage deed.



 

If you want a loan, though you like it or not, you have to pay these charges.

 

Documents required :

 



Income proof : A salary slip for employed, or IT returns of at least 3 years for self-employed.

Residence Proof : Ration card, land line bill (preferably MTNL), Electric bill.

Photo ID Proof : Driving License, Pan Card, Voter’s ID card etc.

Age proof



Tracy

Pamella Scott asked:


 

Many of us do not know that our own homes can rescue us when in need of money. There are loans that can be taken be taken by pledging your home as security/collateral. Such types of loans are called secured home loans. They can fetch you an amount up to 90% of the equity value of your home. Some lenders might even offer you a 125%. This money can be used for various purposes like investing in business, renovating your home or paying off outstanding bills. Secured home loans are, however, primarily taken when people want to buy or build a new house. In such cases, the new house is taken as collateral.

 

A secured home loan is a viable option if you are looking for a low cost loan because interest rate charged tends to be low. The bigger the amount that you put forward as down payment, the lower the rate of interest. Rates differ with different lenders so shop around before nailing it down to one. You can compare quotes and seek out low rates by doing online research.

 

The interest rate for secured home loans can be either fixed or variable. A fixed rate will remain unchanged throughout the repayment duration. Variable rate of interest is, on the other hand, dependent upon the state of the loan market. A secured home loan that charges variable rate of interest starts with lower rates, making it a quite popular option. However, the rate might rise as per the change in the loan market condition.

 

Apart from the reasonable rates of interest, secured home loans have other bonus points. The period of repayment can be extended till 25 years and repayment can be made in low monthly installments.

 

Secured home loans thus have many benefits. Though you must not renege on the agreement else you stand to lose the house. Think carefully before borrowing a big amount. See to it that the total repayment amount is within your repayment capability. If you are in doubt about anything regarding the terms of agreement, do not hesitate to ask questions. Always be on the lookout for hidden costs and fees. Taking such precautions will help you get the best out of your secured home loan.



Anthony

Alan Lim asked:


Home Loans

A home is not something that one goes around buying on a regular basis. It is a carefully planned move and often comes attached with high expectations and anxiety. It is also more often than not unrealistic to imagine buying a home without a home loan of some kind. But let’s begin with the preparations you need to do to apply for a home loan.

Preparing for a loan application

Some lenders might not require any but if you are in a position to make a down payment, the larger it is the better it is. Calculate your personal finances; total monthly income and the amount you have as savings to estimate how much you can spend on your monthly loan payments. Don’t forget to gathering your documents; pay stubs and the W-2 forms if you are employed, and a balance sheet and income tax returns for those who are self employed. All applicants must also have ready their bank statements and information on investments. If the loan applicant is someone who has retired with pensions, a 1099 form, along with the person’s social security award letter and copies of the pension checks are generally required.

Type of home loan

There are several types of home loans that a lending organization can offer to people. The most popular is possibly the Fixed Rate Loan which lets you know from the start how much your periodic instalment payments will be because both the principal sum as well as the interest rate is fixed. This way, you have the advantage of preparing for your payments on time. The other option is generally the Adjustable Rate Loans. There are also other flexible loan programs that are offered buy this may vary from lender to lender.

Interest on a home Loan

The national mortgage rates also change based on a variety of reasons. For example, the interest rates on the first week of August 2007 have been as follows; 6.11% for a 30-year fixed loan, 5.76% on a 15-year fixed loan, and a 6.60% on a 30-year fixed jumbo loan. Because rates can fluctuate at any time, fixed loans are generally considered safe.

Home loan benefits

Benefits from home loan can differ from country to country. In the United States, the Department of Veteran Affairs offers one of the best home loan benefits for war vets. A Veteran Affair Loan generally ensures a guaranteed loan where the interest rates are negotiable and tax deductible and other fees generally lower than usual.

Normally they also don’t require any down payment. General professionals who earn $50K to $80K a year can also sometimes qualify for a discount on the interest rates.

There are other general advantages of a home loan too, especially if you take a home equity loan. All of your interest on the loan is tax exempt. Also, because the home loan industry it self is so huge and an interlinked in the international financial market that companies often compete with each other to lure more customer to their institution by offering better rates and packages. Also, as the prices of real estate continue to rise as it has for sometime now, the homeowner is also generally able to take larger loan.



Tracy

Andrew Baker asked:


Home Loans are the best option you can go for to finance a new home. You can apply the home loans for constructing a home, purchasing a ready built house/flat, residential plot.

Every one has a dream of having their own home rather than spending life in a rented house. But people can not afford this expectation as it demands a lot of money to fulfill. With the help of home loan you can realize the dream of having your own home without any financial problem.

Home loan is a secured kind of loan where home is the only security against the loan. This kind of loan enables you to get a large amount of money with low interest rate and flexible repayment terms. Because you are providing home as security you are benefited in terms of better interest rates and repayment period .You can also spread your borrowing over a longer time in this type of loan.

Secured home loans generally amount from £5,000-£75,000. Repayment term varies from 5-25 years depending on the loan amount.

Secured home loans are based on borrower’s requirements. They can use the loan amount for any purpose such as refinancing the home loan, renovation of home, investing in property and debt consolidation without any restrictions.

Bad credit borrowers are also eligible for secured home loans. The home of the borrower is pledged thereby convincing the lender to offer them a lower rate.

Secured Home Loan application process is very simple and quick responding specially on online process. You can get your loan within a very short period time through online process because of its time saving factor.

Now borrower can easily purchase a new home with the help of home loans which provides a bigger amount. Hence, secured home loan is an easy way to fulfill your demands.



Dana

Dina Wilson asked:


Buying a home is a dream of every person. Constant rise in property rates has made it only a dream for anyone to achieve. With home loans you can realize your dream of being a home owner. Home loans are offered to people to accomplish their dream and give them an opportunity of owning a home.

The home loans can be used for buying or constructing new home or for other needs like buying car, home renovation, debt consolidation, planning out a holiday, for higher education, wedding etc.

Home loans are secured in nature and are taken against equity in your home. Before offering loan the creditor evaluates present value of your home, outstanding mortgages, and any other debt which you have taken. Then the loan amount offered is calculated after deducting all outstanding debts and mortgages.

You can borrow anything from £ 5000 to £ 75000 for a term of 5 to 25 years. This amount may vary depending on the market value and registration value of your property.

Home loans generally carry lower interest rates and have flexible repayment options. The borrower can choose between fixed rate and variable rate. In fixed rate loans, the interest rate charged remains constant for the entire duration not effecting your monthly payments. On the other side, variable rates fluctuate and vary with market rates. Your monthly payments increase and decrease with changing rates.

A good credit history will enable you to easily attain loan. But that doesn’t mean that those with bad credit can’t apply! Bad creditors with less than perfect credit like CCJs, missed payments, bankruptcy, IVA, repossession can also qualify for home loans. You may have to pay slight higher interest rates owning to your credit problems.

You can apply for home loans either through conventional method or online. Online application is less time consuming. You can easily search for lenders that offer great deals at competitive rates.

Home loans are a financial tool that enables you to accomplish your dream of buying a home. These loans offer many benefits to borrowers. It caters to not only your home buying needs but allows you to resolve other purposes as well.



Leon

Kristin Abouelata - Home Loans asked:


It’s not very often that a borrower takes into heavy consideration what his loan to value is when shopping for a loan.  In fact, if the subject is brought up by the customer, it’s mostly in relation to avoiding paying monthly mortgage insurance.  But sometimes, a loan to value can affect even more aspects of your loan – like pricing and approval!

What is loan to value?  Well, it’s exactly what it says.  The loan amount compared to the value of the home you are buying or refinancing.  For example, if you are buying a $100,000 home, and your loan amount is only $50,000, your loan to value or “LTV” is 50%.  It’s also very common to refinance a home to obtain a lower LTV and drop mortgage insurance that was before required.

Different types of loans have different minimum requirements for LTV’s.   With primary residence purchases, for instance, an FHA loan can have as high as a 97.75% LTV (soon to change to 96.5% in 2009).  A conventional loan can have as high as a 97% LTV (but more common is 95% LTV).  VA and Rural Housing loans can have 100% LTV’s.  People who have cash to put down on the property they are buying and financing with a conventional loan oftentimes try to amass 20% of the purchase price in order to avoid mortgage insurance.  Mortgage insurance is required when your LTV for a primary residence is above 80% and is issued by independent mortgage insuring companies like Genworth Financial or PMI.  Fannie and Freddie, the big purchasers of conventional loans, will require one of these or other approved companies issue mortgage insurance unless the loan has an 80% LTV.  And if you’re refinancing the home you live in?  The whole grid of acceptable LTV’s changes for the most part, with a few exceptions.  And furthermore, if you’re talking about investment properties, it’s another can of worms.

But when else does LTV mean something?  Consider when a loan specialist prices your loan.  Oftentimes there are pricing differentials based upon the loan to value.  For instance, if you carry mortgage insurance and your LTV is 85.01% or higher, you might actually get a better interest rate than if you had an 85% LTV (but don’t get too excited because your monthly mortgage insurance will be higher).  Or if your LTV is 60% or lower, you might also get a better interest rate.  If you are close to tipping the scales on one of these ratios, it may be to your benefit to ask your loan specialist how close you are to a pricing break one way or another.  You’d be surprised to find out it might change your mind as to how much money you decide to put down on your loan. 

And guess what else?  A low loan to value may be the difference between loan approval and loan denial.  Why is that?  Because if you are investing enough of your own money into the equity of a property, chances are you won’t default on the loan.  And if you do, it’s probably a last recourse.  Not to mention, the lender who holds the note won’t lose money because there is enough equity in the property to cover foreclosure costs, re-sale costs and any value loss from an upside down market.  The lender is covered.  So, the lender will consider the loan less risky and a higher debt to income ratio is tolerated when reviewed with a high credit score. 



Betty

Martin Lukac asked:


You are planning to buy a new home. There are many issues that bother you at this point of time and the major one is finance. With markets full of options for home loans, there are many things to be considered while choosing a particular home loan program. We will go through the necessary steps to get home loan: some before you apply for it and some after you apply for it.

Steps to get home loan # 1 Maintain your credit records: Good credit track record will help you a long way in getting your home loan approved smoothly and quickly. So pay all your bills and takes on time every time, especially in the year before applying and during the period when your application is being processed. Pay down your credit card balances as it will reduce your liability and increase your credit score.

Steps to get home loan # 2 Get Pre-qualified for a home loan: Getting pre-qualified for a home loan is a good idea because it gives you an idea how much you can borrow. You can get pre-qualified for free from any major lending institutions. It can even be done over phone.

Steps to get home loan # 3 Organize all your paperwork and decide on a budget: Keep all your financial documents handy. These documents would include copies of your bank account statements, income tax returns, pay slips, recent credit card statements, and divorce decree and child support documents. Organizing these documents would also help you have an idea about your financial status and budget. The maximum limit of home loan that the organization will provide will be different to the limit that you can afford.

Steps to get a home loan # 4 Get a guarantor: Though all organizations do not ask for guarantor, it always works to your advantage to have one. This also increases your credibility and chance to approval of a higher amount.

Steps to get home loan # 5 Apply with all relevant documents: Once you have decided to buy a particular property apply for the home loan. The more complete and accurate your documents, faster will be your home loan process. You can even apply online and the loan agent will get in touch with you.

Steps to get home loan # 6 Processing and Verification: All the documents submitted by you are verified during the processing of your loan. A loan officer might visit your property as well as your current residence to verify your details. Your employment details will also be checked. An appraiser will call you up and visit your property you want to buy, for its valuation.

Steps to get home loan # 7 Loan Sanction: After all the details provided by you are verified to the satisfaction of the loan officer, a letter of sanction will be issued. This letter containing the amount of home loan and the terms and conditions has to be signed by you.

Step to get home loan # 8 Submission of original property documents: Your title deed will have to be left with the lending company as security for the home loan. You will have to go to the company to sign the loan agreement.

Step to get home loan # 9 Disbursal of the loan amount: You can withdraw the amount of loan as and when required by you as per the stages of construction of your house or payments. Until the whole amount is withdrawn you will be required to pay only the interest on the amount withdrawn. Your Equated Monthly Installments (EMI) will begin only after the loan amount has been withdrawn in full.



Stella

Steven Walters asked:


One thing that people don’t realize is that getting bad credit home loans can sometimes lower your monthly payments and provide relief from other high interest debts like credit cards. They also don’t think about the other benefits that come with bad credit home loans such as the boost that the new loan will give to your credit score. Just by itself the credit repair is justification for taking a poor credit loan. And, you can consolidate all of your other higher interest debts into one lower interest rate loan with just one monthly payment.

With the internet being so pervasive these days it’s easy to do all of your bad credit home loan research online and save yourself loads of time. It’s so easy to go online to compare the individual bad credit lenders and see their fees, costs and interest rates at a glance. If you’re considering bad credit home loans make sure that you research well and check out a variety of lenders to find the best rates and fees for the loan. Bad credit lenders rates can vary widely. One good thing is that the online credit applications are very easy and straight forward to fill out. The credit companies make them easy because they want your business.

The past 18 months has seen the demand for bad credit home loans skyrocket. In addition, all types of poor credit loans are seeing increasing demand. This is due in part to the U.S. mortgage crisis combined with a poor economy. As you might expect, there are also a greater number of online poor credit lenders to take advantage of this increased demand for their services. Because many of the online bad credit lenders are new you must make sure that you check them out carefully before giving them any of your personal information. Check that the lender is licensed in your state and make sure you feel comfortable with them before you agree to anything.

If you’re considering a poor credit home loan the first place to look is at FHA loans through Freddie Mac and Fannie Mae. These loans are made for those with less than perfect credit and you’ll often get better rates from them on an FHA loan than you would from a traditional lender like a bank or credit union. They will also give you a much better deal than you’ll get on bad credit home loans through and online lender.

The biggest thing that will affect your interest rates and the fees and costs of the loan is your credit score. Having a score below 640 could very well limit you to an 80% loan, meaning you will need to have a 20% down payment. On the other hand, there are some bad credit mortgage specialists who will work with you even if your credit score is as low as 560. Keep in mind that the lower your credit score the higher the interest rate will be on the loan, so you may be better off waiting several months to a year while working on improving your credit score before you apply for a bad credit home loan.

The bad credit lenders will make sure that all collection accounts have been paid and that there are no recent bankruptcies. They will also look at your current payment history on your mortgage, car loans and credit cards and these should all be current with no late payments in the past year.

If you have all of these things covered then getting a bad credit home loan should be easy. They can also be a great way to become a home owner and increase your credit score for the future.



Christian

Meghna Arora asked:


The prospect of having a home is every individual’s desire and dream. An individual spends his entire savings only for this reason. But with the entire savings purchasing a home is not possible. It may look easy for the one who are affluent but for some other individual, arranging the necessary finance is a daunting task. With the upward tilt in the prices of real estate, it becomes even more difficult. Now, to assist borrowers in buying their prospective homes, lenders and banking institutions are providing New Home loans.

New home loans have got popularized within a short span of time. At present it is the most sought after loan by borrowers who are in the process of buying a new home. . The loan is worthy of its name. It is estimated that transaction worth billions of pounds has taken place from banking and financial institutions and the numbers are increasing by the day. New home loans are of two types. They are –

• Fixed rate new home loan

• Variable rate new home loan.

Fixed rate new home loan: The rates of interest are fixed in the case of fixed rate new home loans. If you avail the loan, the rate of interest will be kept same for the whole repayment period. Even if the interest rate goes up, you have the benefit to pay the same interest rate.

Variable rate new home loan: In the case of variable rate new home loan, the interest rate you get is initially lower. Depending on the fluctuations on the market, if the interest rate increases, you have to pay the new interest rate.

New home loan is designed such that you get the loan at affordable rates of interest. The growing popularity of the loan has compelled the lenders to provide new home loans through online. The online mode helps the borrower to access the loan in a fast paced manner. By just clicking a few buttons and sitting in your home or office, you can access the loan.

New home loans beckon a ray of hope for borrowers who cannot afford to buy a home on their means.



Tamara

Ian Mcintosh asked:


When you finally find the new home you are looking for that suits you and your family perfectly, it is so exciting. Having difficulty securing a home loan or a home mortgage can put a huge damper on the experience. To take the pressure off applying for home loans, check into pre-approved home loans or mortgage loans, which have many benefits including knowing your maximum home loans price range. When you get pre-approved home loans, you know exactly how much you can afford to spend when house hunting, your minimum down payment, maximum monthly mortgage payment and the best part is that the bank guarantees the home loans.

Along with different lenders, there are many different home loans available on the market today. They all have something a little different from the other such as benefits, costs, and features. People looking for home loans for the first time often find this confusing. Many first time homebuyers choose basic home loans, which have no special benefits or features adding to the cost. They do have relatively low, variable interest rates with loan repayment terms that are shorter. The minimum repayment amount decreases if the interest rate drops. There are a few cons to getting basic home loans such as repayment amounts rising when interest rates do. In addition, they do not have the features or flexibility of many other types of home loans.

Many believe fixed rate home loans are the safest mortgages because the bank locks in the interest rate and this remains the same throughout the home loans mortgage, so even in a volatile market, the interest rate remains the same. You know exactly what your mortgage payment is each month, so it certainly makes budgeting easier, which gives the homeowners a sense of stability and security. The market conditions do not affect the principal and interest of a home loans mortgage. The downside is that homeowners with fixed rate home loans or mortgages do not benefit if the interest rates drop because a fixed rate locks them in.

Interest rates on variable rate mortgages change and increase or decrease when the interest rate varies. Fixed-rate mortgages, known as adjustable rate mortgages in the United States, are usually more expensive than variable rate mortgages. The borrower’s payments may change because of interest rates that increase or decrease. There is also a graduated payment mortgage, which has a fixed interest rate but changing payment amounts. There are several other types of home loans mortgages including balloon payment mortgages, negative amortization mortgages, and interest only mortgages.

And remeber, Purchasing a first home is very exciting and usually the biggest investment that most people make in their lifetime. To pre-qualify for mortgage loans involves providing the lender with personal information such as income, assets and liabilities. Although the lender gives you a rough estimate of the maximum amount you qualify for, there is no charge for this service from the lender. This is a very informal process where the information is not checked and there is no formal agreement on approving mortgage loans to the client. Pre-qualification of mortgage loans gives you a broad idea of how much money you may be able to borrow from a lender and the price range to look in for a home. There is no guarantee when it comes to pre-qualification of mortgage loans but the lender does give you an idea so you can decide if you are ready or willing to borrow that amount.



Jackie