First-Time Home Buyers: Do’s and Don’ts

First-Time Home Buyers: Do’s and Don’ts

The Banker

Buying a home for the first time can be overwhelming. As a first-time home buyer, there are so many decisions to make along the way, from your agent, to your loan officer, to your loan product. But-buying a home doesn’t have to be stressful! Making sure you are prepared will put you miles ahead of other buyers, and help ease your mind during the entire process. Following some simple do’s and don’ts is a great place to start if you are thinking about buying a home for the very first time.

DO research your lenders

Your lender is likely going to be with you throughout the entire home buying process, usually before you’ve even started looking at homes! As a first-time home buyer, you want to find one that you feel comfortable with. Don’t be afraid to get different quotes from multiple different lenders, and decide which one is the best for you.

DO ask questions about all of the loan programs offered

When you’ve chosen your lender, make sure you ask about the pros and cons of each loan program for your situation because Understanding the Mortgage Process as a First Time Home Buyer is very important. Your loan officer will likely give you options of the programs that they think are a good fit for you, and some of them may be specific programs designed for first-time home buyers. If you don’t fully understand something, they will be more than happy to clarify and help you make the right decision.

DON’T only shop for a rate, without looking at the over all cost

The interest rate on a loan is the cost of borrowing the principle loan amount. This is always expressed as a percentage. This is used to measure the cost of the over all loan. It includes the interest rate and other costs. You will want to take both into consideration to make sure you are getting the best deal.

DO make sure your credit is in good standing

There are loan programs offered to fit best credit scores, but the higher your score, the better deal you are going to get a first time home buyer. Make sure your credit is in good standing before you start the home loan process by making all of your payments on time, keeping your utilization low, and not closing or opening any accounts until after the loan process is over.

DON’T empty your entire savings

Buying a new house can come with a lot of unexpected expenses. You will want to make sure that your savings account isn’t drained after closing on your loan, and that you’ve left a cushion for a rainy day. As a first-time home buyer, you might not be sure what to expect after closing on a home, so it’s best to leave yourself with some money in the bank just in case.

DO find the right agent

Finding the right agent is a key component to the home buying process, especially for first-time home buyers. They will be able to help you draw up the contract when you are ready to make an offer, and help you with getting the best deal on the home. Then they are able to act as a go-between during your entire inspection and loan process, and can explain anything that doesn’t make sense. Interview a few different agents to see which one you think is a good fit for you.

DON’T shop for a house before you are pre-approved

You want to make sure that you can afford the homes you are shopping for, and for that reason many agents will require a pre-approval letter before they start to show you homes. It’s a good idea as a first-time home buyer to get this out of the way early on, and will make your first time home buyer loan process easier.

DO determine how much you can afford

Your lender can help you with this, and let you know the amount you are pre-qualified for. This way, you are only looking at homes in your price range. First-time home buyers might not know exactly what they want or can afford, and your lender and agent can help you with both of these things!

DO get adequate insurance

Insurance will be required by your lender, and if you aren’t sure where to start, ask your agent or loan officer for some recommendations. They can connect you with insurance agents that they work with often, and make sure you are getting a good deal on your policy. Now a days banks provide inbuilt insurance plans for the property and owner which covers loans.

DO ask questions to make sure you fully understand the home inspection and loan process

If there is anything throughout the home buying process that you don’t fully understand, don’t be afraid to ask questions! Your agent and loan officer can help explain anything that you need them to. For first-time home buyers, they are more than used to it, and after all, that’s part of their job!

DON’T buy new things for your home right before closing

When being a first-time home buyer it is exciting and fun while it can be tempting to go out and splurge on new furniture for your new house. Wait for some time to close the deal.

DO find the perfect home for you

Your agent can help you find the perfect home. Don’t settle for something you aren’t sure you want-a home is probably the biggest purchase you will ever make! You deserve to get exactly what you want, and your agent is there to help you find it.

Being a first-time home buyer can feel a little daunting. You are starting the process for something that you’ve never done before, and it’s a big deal! Finding a good agent and loan officer to help guide you through the process and answer your questions can be the difference between a stressful and a smooth home buying experience. Following the tips above will help set you up for success, and put you ahead of the game. And remember, at the end of the day, the goal is to get into the home of your dreams!

LOAN AGAINST PROPERTY

THE BANKER

With a loan against property, you can overcome any cash crunch, especially that which requires a substantial amount. Whether you are paying for your child’s wedding, financing overseas education or starting or expanding a business venture, a loan against property can fund it all. However, the key to a financially stable life is retaining ownership of the property you have pledged, which is much easier to do when you have your priorities in order. Look at all you need to consider when you are taking a loan against property.

Factors to consider before taking a LAP

1. Loan amount and disbursal

Maximum loan amount depends on the valuation of mortgaged property. Lenders provide 50-75% of the property’s market value. While evaluating the market value of the property, lenders take into consideration various factors such as location and age of the property, infrastructure, geographical stability, etc. Post the valuation process, the sanction amount is finalized depending upon factors such as customer’s repayment capacity, credit score, debt to income ratio, etc. The disbursal of loan against property usually takes one week to three weeks.

2. Eligibility

The eligibility of your Loan Against Property depends on the following factors i.e. age, income, existing financial responsibilities, repayment and credit history, and the property value as per the current market rates. You can also include your spouse or child, even if they are not a co-owner of the property as a co-applicant for the loan, to help improve your eligibility.

You need to submit documents to check your eligibility; the documents will involve income and address proof, as well as that of the property.

3. Interest Rate

Being a secured form of loan-backed mortgage, loan against property usually involves lower interest rates, starting at as low as 9.65% per annum. On the other hand, other borrowing options such as personal loan involve higher interest rates, ranging from 10.49%-36%.

4. Tenure

LAP borrowers may find comfortable with the longer tenure offered, but in the long run they end up paying more interest which makes the loan costlier. Before short listing the bank/lender understand how much the loan is going to cost. Choose between floating and fixed interest rates by keeping an eye on the fluctuations and predictions of the market. Shop around for lenders who offer competitive interest rates.

5. Repayment Plan

It is still necessary that you plan your repayment in advance and have a strategy in place to repay your borrowed amount. If you want to pay off your debt, you have to make some tough choices. The first of them is which debt repayment option you will choose. There are pros and cons of each option and the one that’s best for you depends on your debt, your income, your monthly expenses, the importance of your credit rating, and how much of the debt you want to pay off.

6. Tax Benefit

When you take loan on the name of firm or a firm becomes a co applicant in the loan you can put all the interest in expenses. Condition is that you must have to use the funds for business only.

7. Co Applicants

In case of multiple owners of the property, they all need to be co-applicants when applying for a LAP, because the lender needs to be certain that all owners of the property have agreed to offer the property as security to take the loan. You can also include your spouse or child, even if they are not a co-owner of the property as a co-applicant for the loan, to help improve your eligibility.

8. Processing Fee and Prepayment Charges

Just like other loan options, loan against property also involves processing charges, which is usually up to 1-2% of loan amount. In addition to this, lenders may levy prepayment penalty for loans lent at fixed interest rates or to non-individuals at floating rates, but floating rate based loans granted to individual borrowers usually do not attract such penalty due to RBI’s guidelines.

9. Terms and Conditions

Be careful about the add-on charges and penalties. It’s not just the interest that you pay. There are additional charges such as administrative and service charges or processing fees. Also, there are penalties like on pre-payment of the loan. Consider these when comparing the deals offered by various lenders. Reviewing the fine print can help you ensure you are dealing with the right lender; locate any hidden charges that can affect your affordability, and help you stay cautious about any extra expenses you may incur.

 Dhara Finance can arrange loans from almost all the banks. You can apply for an attractive offer with best possible rate of interest and terms.

Borrow Wisely

How to Borrow Wisely

BY the banker
25 jan 2020

                                       Borrowing makes a lot of things possible. But borrowing can be expensive, and it can even ruin your finances. Before you get a loan, get familiar with how loans work, how to borrow at the best rates, and how to avoid problems.

Borrow Wisely

Loans make the most sense when you make an investment in your future or buy something that you truly need and can’t buy with cash.

Some people think in terms of “good debt” and “bad debt,” while others see all debt as bad. It’s easy to identify bad debt (Vacation funded entirely on a credit card), but good debt is more complicated

Before you get into the nuts and bolts, it’s important to evaluate exactly why you’re borrowing.

Education expenses have a fairly good reputation: You’ll pay for degrees and skills that open doors for you professionally and provide income. This is mostly accurate, but everything is best in moderation. As student loan defaults reach all-time highs, it’s worth evaluating how much you pay against the potential payoff. Choose your field of study wisely and keep borrowing to a minimum.

Home ownership is also seen as a good use of debt. Still, home loans were responsible for the mortgage crisis of 2008 in USA, and homeowners are always relieved to make their last mortgage payment. Home ownership allows you to take control of your environment and build equity, but home loans are large loans.

Automobiles are convenient, if not necessary, in many areas. Most workers need to physically go somewhere to earn a living, and public transportation might not be an option where you live. Unfortunately, it’s easy to overspend on an automobile, and used vehicles often get overlooked as inexpensive options.

Starting Or growing a business can be rewarding, but it’s risky. Most new businesses fail within a few years, but well-researched ventures with a healthy injection of “sweat equity” can be successful. There’s a risk and reward tradeoff in business, and borrowing money is often part of the deal — but you don’t always need to borrow large amounts.

Loans can be used for anything else, (assuming your lender doesn’t restrict how you use the funds). Whether or not it makes sense to borrow is something you’ll need to evaluate carefully. In general, borrowing to fund your current expenses — like your housing payment, food, and utility bills — is not sustainable and should be avoided.

Costs and Risks of Loans

It’s easy to understand the benefits of a loan: you get money, and you can pay it back later. More importantly, you get whatever you want to buy, such as a house, a car, or a semester at school. To get the full picture, keep the drawbacks of borrowing in mind as you decide how much to borrow (or whether or not a loan makes sense at all).

Payments: It’s probably no surprise that you’ll need to repay the loan, but it’s challenging to understand what repayment will look like. It’s never fun to make loan payments, especially when they take up a large part of your monthly income. Even if you borrow wisely with affordable payments, things can change. A job cut or loss in business or change in family expenses can leave you regretting the day you got a loan.

Cost: When you repay a loan, you repay everything you borrowed — and you pay extra. That extra cost is usually interest, and with some loans (like home and auto loans), those costs aren’t easy to see. Interest can be baked into your monthly payment invisibly, or it can be a line item on your credit card bill. Either way, interest raises the cost of everything you buy on credit. If you calculate how your loans work (described above), you’ll find out exactly how much interest matters.

Credit: Your credit scores rely on a borrowing history, but there can be too much of a good thing. If you use loans conservatively, you can (and probably will) still have excellent credit scores. However, if you borrow too much, your credit will eventually suffer. Plus, you increase the risk of defaulting on loans, which will really drag down your scores.

Flexibility: Money buys options, and getting a loan might open doors for you. At the same time, once you borrow, you’re stuck with a loan that needs to be paid off. Those payments can trap you in a situation or lifestyle that you’d rather get out of, but change isn’t an option until you pay off the debt. For example, if you want to move to a new city or stop working so you can devote time to family or a business, it’s easier when you’re debt-free

How Loans Work

Loans may seem simple, you borrow money and pay it back later. But you need to understand the mechanics of loans to make smart borrowing decisions.

Interest is the price you pay for borrowing money. You might pay additional fees, but the majority of the cost should be interest charges on your loan balance. Lower interest rates are better than high rates.

Monthly payments are the most visible part of a loan — you see them leave your bank account every month. Your monthly payment will depend on the amount you’ve borrowed, your interest rate, and other factors.

The length of a loan (in months or years) determines how much you’ll pay each month and how much interest you pay total. Longer-term loans come with smaller payments, but you’ll pay more interest over the life of that loan. Even if you have a long-term loan, you can pay it off early and save on interest costs.

A down payment is money you pay up-front for whatever you’re buying. Down payments are standard with home and auto purchases, and they reduce the amount of money you need to borrow. As a result, a down payment can reduce the amount of interest you’ll pay and the size of your monthly payment.

See how loans work by looking at the numbers. Once you understand how interest is charged and payments are applied to your loan balance, you’ll know what you’re getting into.

• See how amortizing loans get paid down over time (most auto, home, and student loans)
• Use a spreadsheet to calculate payments and costs for a loan you’re considering.

How to Get Approved

When you apply for a loan, lenders will evaluate several factors. To ease the process, evaluate those same items yourself before you apply — and take steps to improve anything that needs attention.

Your credit tells the story of your borrowing history(By giving your past loan tracks). Lenders look into your past to try to predict whether or not you’ll pay off new loans you’re applying for. To do so, they review information in your credit reports, which you can also see yourself (for free). Computers can automate the process by creating a credit score, which is just a numeric score based on the information found in your credit reports. High scores are better than low scores, and a good score makes it more likely that you’ll get approved and get a good rate.

If you have bad credit or you’ve never had the opportunity to establish a credit history, you can build up your credit by borrowing and repaying loans on time.

You need income to repay 

So lenders are always curious about your earnings. Most lenders calculate a debt to income ratio to see how much of your monthly income goes towards debt repayment. If a large portion of your monthly income gets eaten up by loan payments, they’re less likely to approve your loan.

Other factors are also important. For example:

• Collateral can help you get approved. To use collateral, you “pledge” something that the lender can take and sell to satisfy your unpaid debt (assuming you stop making the required payments). As a result, the lender takes less risk and might be more willing to approve your loan.
• Loan to value ratios on your collateral are important. If you’re borrowing 100 percent of the purchase price, lenders take more risk — they’ll have to sell the item to get their money back. If you make a down payment of 40 percent or more, the loan is much safer for lenders (partly because you have more skin in the game).
• A cosigner can improve your application. If you don’t have sufficient credit or income to qualify on your own, you can ask somebody to apply for the loan with you. That person (who should have good credit and enough income to help) promises to repay the loan if you fail to do so. That’s a huge — and risky — favor, so both borrowers and cosigners need to think carefully before moving forward.

Over all taking a loan is like see saw so take care of balance.

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How To Fix Your Credit Rating? – 8 Secret Tips

How To Fix Your Credit Rating? – 8

Secret Tips

January 23, 2020

Looking for ways to fix your credit rating ? Something that won’t cost you much more than — what you already owe — both financially and mentally!

Credit rating, after all, is that one key factor, which determines whether you will be able to borrow from a prospective lender. The lower your credit score, the riskier you are as a borrower for lenders. And, the riskier you are, the tougher it is for you to find a lender.

Fixing a credit rating, however, is not rocket science, nor is it any form of financial wizardry. It is merely a process that takes some discipline, research and a whole lot of patience — depending on how bad your credit score is.

So we’ve created a handy guide to answer a deceptively simple, if puzzling, question: How to fix a bad credit rating yourself?

How to fix your credit rating?

Credit repair, on its own, is not the end goal you’re pursuing; you might just be looking to apply for a home loan after fixing your credit rating.

Which is why you should keep that in the back of your mind and follow these secret tips to fix your credit score because they are your ultimate do-it-yourself-credit-repair-kit.

·         Help yourself because you actually can!

·         Order a copy of your credit report.

·         Have your incorrect credit listings removed.

·         Be patient. It is going to take quite some time.

·         Avoid making random credit enquir.

·         Negotiate with your lenders.

·         Update your personal details.

·         Consider debt consolidation.

Tip 1: Help yourself because you actually can!

The first and obvious way to start fixing your credit score is by actually helping yourself get out of any current and future debts.

Some of the things that you should and should not do once you embark on this quest to improve your credit rating are:

·         Start by taking control of your finances. Pay all your bills on time and try not to miss any due dates. Did you know, under comprehensive credit reporting, just one missed repayment can reduce your score.

·         Reduce or plan your living expenses and adjust your budget to meet the amount of repayments, if any.

·         Try and keep your older credit cards as their aged credit history appears better than that of newer ones on your credit file.

·         Build your savings by making timely deposits to your savings account, to reflect that you are good with your finances.

Tip 2: Order a copy of your credit report

You can order here https://www.cibil.com/loans-home

So, go ahead and order your credit report. Regularly scanning through your credit report will not only keep you updated with your score but also allow you to pinpoint any errors.

Tip 3: Have your incorrect credit listings removed

Remember this: If anything on your credit report is unverifiable, incomplete or inaccurate, it can and will be erased. What you have to do is dispute it with your creditors or credit rating agencies.

But to dispute it, you first need to locate those possible inconsistencies on your credit report. That is why you need to order your credit report and make a habit of going through its details.

Having those incorrect listing removed from your file will undoubtedly help increase your overall credit rating.

Tip 4: Be patient — it is going to take quite some time

Credit repair is a frustrating process. It takes a lot of researching, budgeting, negotiations and possibly countless bureaucratic hurdles.

So proceed with patience because you are likely in this for a long haul. But you will get there eventually, and your credit score will benefit from your patience.

Depending on the type of listing, it can last up to 7 years on your credit file. Late payments may remain on your credit file for up to 2 years whereas defaults may stay on your report for up to 5 years. So, you probably have to wait it out.

As far as disputes are concerned, when correctly raised, it may take far less time to be resolved. Incorrect listings usually get resolved in 30 working-days from the day you raise your dispute. However, it may take less or more.

Tip 5: Avoid making random credit enquiries

Whenever you apply for credits like home loan, credit card or car loan, you end up adding a credit enquiry on your credit file.

What credit applications do is lower your credit score and hurt your probability of getting loans. The more credit enquiries you make, the more it affects your credit score.

So avoid making random, hasty credit enquiries with several lenders within a short time. Better yet, don’t apply directly for larger credits like housing and investment loans.

Tip 6: Update your personal details

Since your personal details partly contribute to your credit rating, it is a wise idea to keep that information updated with your credit providers. Whenever there is a change of residential address or contact information, you need to inform them.

Doing that will help them redirect all your invoices and payment to your new location so you won’t miss out on any repayments.

We’ve had many customers come to us because of adverse listings on their credit report due to notices and bills being sent to their previous address. And, the lenders ended up listing a default when the customers had simply forgotten to update their address.

A timely update also means your lenders can keep track of you because if they can’t, they will interpret you as a clear out case.

Tip 7: Negotiate with your lenders

Your lenders or the debt collection agency want to collect their debt. That’s why they would rather accept less money than no money at all.

If you’ve missed a few repayments, why not negotiate new, flexible repayment terms with your bank? Banks usually have options such as repayment holidays and financial hardship variations.

If you’ve already defaulted on a loan, you can negotiate new less severe terms. When you’ve repaid your creditors, they may get your negative listing removed from your credit report.

The bad debts usually get passed on to debt collection agencies, who may reduce the debt, if you negotiate.

Tip 8: Consider debt consolidation

When you have many debts on you, it is tough staying on top of each account. But you can consolidate all your debts — credit cards, personal and others — into a single repayment when you apply for a home loan.

Whether you are buying your first home or just looking to refinance, it is an option that is always available for you. And, it often comes with competitive interest rates.

You may also be able to consolidate your debts with the help of a guarantor, and borrow up to 90% of the property value.

Is your low credit score keeping you from applying for a home loan?

It shouldn’t!

Just because you have a low credit rating doesn’t mean you can’t apply for home loans.

Sure, the banks won’t qualify you for a mortgage but our bad credit specialist brokers may be able to find you specialist lenders who can consider your situation.

Please enquire online or call us on 8109549233 or 8224930532 to discuss your situation in detail.

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