Planning to buy a house? Are you ready for the documentation that banks will ask for when they will evaluate your loan application. You will have to keep bank in confidence that you are likely to repay home loan according to the terms of your mortgage agreement.
Recently in the budget, there has been a move to push affordable housing segment as said by Arun Jaitley in his speed. He granted infrastructure status to the affordable housing schemes in the country. With this news it will be possible for developers to enjoy the benefits associated with it. It will also increase the growth in segment and lead to higher consumption and growth in affordable home loans business.
You will be enquire for factors related to your past and present financial situation. What are the specific points that the banks will look at? Here is a detailed list of item that all lender take into consideration before approving a home loan:
What’s your Credit Score?
By knowing your credit score, naks can get a handle on your credit history. The higher the score, the better will it be. And if you have a low credit score, you will be facing difficulty in getting loan.
How is your credit score calculated? It is calculated on the basis of:
Payment history: Paying off your credit cards monthly or carry a balance? Timely payments will keep your score high.
Credit utilization: It is calculated on the basis of the amount of credit you use versus the credit you have available. If you are using your credit score as 90% utilization shows that you are overextended to pay bills on time.
Length of credit history: Your score will be higher if you have longer history of paying balances and bank loans.
Check out FICO’s rundown of credit score metrics for more.
What’s your Income?
When the banks are concerned, what is important is your monthly income with respect to total monthly housing costs. You can take home loan for whatsoever your income is but your income will influence the loan amount for which you’re approved.Lenders will consider your monthly income from all sources to make sure that you have sufficient income to cover monthly mortgage payments.
Any Current Loans?
Any sort of car payments or students loans or any ongoing debts? Such payments will be considered as an effecting factor on your ability to pay back a mortgage. It is not a big thing to have these loans if you are paying it timely but the expense will be deducted from your income to calculate whether you will be able to pay the loan amount. If you do not have any savings after paying the loans, you won’t be eligible for home loan.
Down Payment Percentage
Buyers who are ready to put down 20% have a better chance of receiving a loan. More than that would be even better. It is not the time of those tiny payments, banks now want you to have significant equity from the get-go. 20% is generally the standard for proving you are a capable buyer. Learn what escrow is and how it impacts your down payment.
Be prepared if you are approaching a bank for home loan. With the provision of housing achieving infrastructure status will bring cheaper loans for developers of budget housing and the target of housing for all by 2020 will also be boosted. This is great for real estate sector as the correlation of infrastructure with real estate growth is a well-established fact.