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10 Steps to peaceful Home loan processing (Page 1 of 3)
Building a home of our dream is a life time achievement to a middle class person. For making this dream come true to a middle class person banks are playing a significant role by providing them with the right home loans at door steps. But if do not plan properly and if we are not aware of the policies, terms and conditions of the bank we will end up paying more to the bank in terms of principal and interest components.
For the convenience of our customers we planned to give a 10 steps plan which the customer has to understand to take a home loan to build a dream home of their life.
Please read these 10 steps of processing carefully and follow these to make the transaction a memorable moment in your life.
Before going for a home loan processing please be aware of your loan product and the terms and conditions that the Bank is asking to fulfill to have the loan done. There are different products for which bank is having different terms and conditions for each product. Normally the Bank will have the below products which come under home loans.
a. New Purchase of Flat or Independent House: In this a customer can purchase a New Flat or Independent house of his choice which is under construction or in ready to occupy position.
b. Resale purchase: This product is applicable to those customers who wants to go for a Flat or Independent house which was already owned by some body else.
C. Plot + Construction: The product is applicable to those customers who want to buy a Plot and do the construction immediately, but banks ask you to start the construction with in the specific period of time.
d. Balance Transfer (BT): A person who wants to transfer a loan from one Bank/Financial Institution to other can opt for this product.
e. Construction: A person who wants to construct a house in his/her plot can go for this loan.
f. Plot: A customer can go for this loan who wants to purchase a Plot which is under HUDA, Municipality and Grampanchayat limits.
g. Enhancement: Increasing the loan amount which was already taken from the same bank is called enhancement.
h. Top Up: This loan is just a facility that banks provide to customers to take on the basis of the previous loan and the repayment track.
I. Mortgage: It is the loan that a customer can opt by depositing the original property documents with the bank which he already owns.
2. Rate of Interest (ROI): The most important point to be taken care of in taking a home loan. There are two types of interest rates which banks normally have i.e Floating and Fixed.
Floating Rate of interest is subject to change according to the money market conditions. If the interest rate increases then the bank will increase the Rate of Interest on your loan vice versa.
Fixed Rate of Interest is fixed for the complete tenure of for over a period of time depending on the Banks, but Banks reserve the right to modify the rate of interest if they is any huge differences in the money market conditions.
Home Loan Programs For Military Personnel
The Unites States Veteran’s Administration has made available a series of lending opportunities to military personnel who have served in active duty in the Marines, Navy, Air Force, Army and Coast Guard, and have not received a dishonorable discharge. Generous VA purchase, refinance and streamline loans can save the U.S. veteran significant money over the life of the loan with lenders eager to compete with lower interest rates and the “no down payment” policy applied to some purchase agreements.
Some of the benefits from a VA purchase loan for the veteran’s primary residence include restrictions on the amount of closing costs applied to the mortgage, no penalty for early loan balance pay off, and offers an assumable mortgage to qualified candidates who wish to assume.
The VA refinancing program resembles the private sector loans that enable the home owner to pull cash from the property’s equity and refinance even when the payments are in delinquency. However, the new terms and conditions will be regulated by the private lender.
The streamline refinance option, or IRRRL, allows the veteran to change a short-term ARM to a long-term fixed mortgage, with no cash out of pocket. In some cases, the lender may require a property appraisal and check the applicant’s credit score.
The VA lending procedure is similar to a traditional mortgage loan in that the VA recipient is entitled to a property appraisal. The approximate market value of the home is estimated on the CRV, or certificate of reasonable value and the paperwork is sent to the lending institution for approval. In most cases, the VA will accept appraisal certificates from appraisal companies that have been in business for at least five years.
The veteran may purchase a home at any market price, however, the VA lending system does not grant a loan balance to exceed the CVR findings. The over-budget difference in cost may be paid in cash or carried by a private lending institution. In situations where the CVR price is higher than the asking price, the veteran does not have to make a down payment on the property.
The qualified veteran may select a long-term fixed rate loan to extend to a maximum of 30 years and 37, or choose a an ARM. Applicants for the short-term ARM must adhere to VA regulations that require the loan to have a limited up or down interest rate of 1 percent, a final interest rate cap not to exceed five points above the initial interest rate at signing, and ensure the monthly payments will adjust on the annual date if signature.
To apply for a VA housing loan, the applicant must fill out a “certificate of eligibility” or complete the VA Form 26-1880 along with papers verifying active duty since September 16, 1940. In addition, you must include copies of your military separation papers. Select a real estate agent to help you with the house hunting and sign the purchase agreement. Call your local VA lending office and apply to the mortgage agency of your choice. The VA will take it from there, and you’re ready to move into your new home.