Tag Archives: home
What is Home Loans and Benefits of Home Loans
A Home loan is a loan provided by a bank/financial institution to finance the purchase/construction/renovation of a residential property. It is a much sought-after product because often people do not have the required capital to fund their purchase.
Earlier, there was little borrowing and people generally tried to avoid creating debt.Now with the situation having undergone a change, borrowing to create an asset is not only common but in many situations makes good economic sense. A house is generally considered to be an appreciating asset. This is because the price of the property is expected to rise over a period of time. This makes financing of such a purchase by borrowing a good way to own and create an asset without having all funds for the purpose. Financial planners will always advise against taking a loan for undertaking expenditure but encourage borrowing for buying a house.
The prices of houses in India have shot up quite significantly. This makes a full payment for a house from the existing savings a very difficult task for most Indians, creating the need for housing loans. There has been a sharp jump in the earnings for many people but this does not cut the requirement for a loan to purchase a house.
Home loans are typically long-term loans, with repayment periods of up to 20 years. The house financed is mortgaged with the bank providing the loan. There is an option of fixed and floating interest rate when one goes in for a bank loan. Residential property prices India have shot up significantly, so many people have no option but to bank on housing loans. A person earning Rs 5 lakh a year will aspire to own a house that costs between Rs 15 lakh-Rs 20 lakh while someone with a pay packet of Rs 20 lakh a year would like to own a big- ger house in a better locality that costs anything between Rs 75-80 lakh.
The ability to repay the loan over a long period makes borrowing affordable for an individual because it fits the monthly outgo within his/her income.
Here are some advantages of a Home Loan
With real estate prices skyrocketing in most Indian cities, it is not always possible for the average person to purchase a home out of his/her savings. In such a scenario, a home loan is an attractive option for financing the purchase of your dream house.
If you don’t own a house, you are probably residing in a rented property. So instead of paying a monthly rent to stay in a rented house, you might consider paying a home loan Equated Monthly Instalment (EMI) and stay in your own house.
You can also avail of tax benefits on the principal and interest amounts paid by you towards your home loan. This benefit would be in addition to any HRA tax benefit that you might be deriving.
Refinancing Home Loans and Bad Credit Home Loans
Borrowers who are in trouble may opt for refinancing home loans but the question many of them have is about the sources available. Both official and private avenues are available for them.
Borrowers in deep trouble with their loans, interests, and monthly repayments may consider refinancing home loans smart decision financially. Multiple reasons contribute to this. However, even the refinancing involves cost and may not be the ideal solution for all situations. Moreover, any aspirant for home refinance will come across numerous offers from the providers and it becomes a daunting task choosing from the host of options.
Home Refinance and Bad Credit
One of the questions that would be at the back of the mind of the prospective borrower is whether it is possible getting such refinance home loans despite having bad credit report. To answer this question one should have some basic idea about home loan refinancing process. – Refinancing is one of the simplest ways of reworking the mortgage; – Current mortgage of the borrower is replaced with a new one on much more favorable terms; – It helps the borrower to change and adjust to new mortgage rates and such adjusted rates would continue with fixed rates for life; and – Shorter or longer loan terms can help borrowers to lower the monthly payments so as to free up the cash.
Fact remains that one can still get a home loan and even home refinance with bad credit. At times the bad credit report would be reason for getting a home refinancing loan.
Not Good for All
However, because of the closing costs that are normally associated with home refinancing, it may not be good option for everyone. Despite the lower interest rates, closing costs could be a daunting task for any borrower that would require repayments and starting to save money could become very difficult for any such borrower. Finding the right one therefore is necessary and Internet is a good place to initiate the search. One of the ways of considering the best refinancing home loans would be to find out whether the interests charges are 2% lower than the earlier interest rate at the minimum. In such case the refinancing would be good option. In addition; the borrower must consider staying at the home for at least three years.
Finding Bad Credit Home Refinance
Coming to the question that refinancing home loans would be available for those with bad credit, the answer is that bad credit home financing is available in the market. Families finding themselves in a situation where they are unable to refinance will certainly like to check out bad credit home refinancing with the lenders online because that is where they can expect to find the solution to their problems.
Available Refinance
Refinancing home loans can be possible despite having bad credit record through the FHA or the Federal Housing Administration. It is one of the best ways of avoiding foreclosure. In such refinancing, 97% of the mortgage is covered leaving out 3% for down payment. With the new Congress directives, assistance is available even for such down payments for those who require it. Borrowers may choose either fixed or adjustable rates.
In addition; there are also some private lenders that offer home refinancing for people with bad credit record.