To convert the dream of ‘owning a home’ a reality, you may have to go through a daunting process like looking for the suitable property, accumulating for down payment, applying for a loan, and a lot more. Especially, when you are applying for the loan for the first time, you may face many setbacks. It is better to list out the expected problems and be well-prepared to avoid rejection at a later stage.
Here are the most common problems faced by the first-time home loan borrowers.
1.Rejection From The Lender: When you are attempting for a home loan for the first time, chances for the rejection are high due to several reasons.
- You may provide credentials that do not match with the lender’s expectations.
- The lender may find it difficult to verify your details.
- You may produce the documents in a format that is not asked by the lender.
So ensure to submit the right documents to the lender in the right format, as per the requirement. Also, try to submit within the specified deadline to ensure quick approval. To avoid rejection, ensure that the age, income, and other details match the lender’s criteria.
If you are not sure of satisfying the factors like monthly income, credit score, employment details, co-apply for the loan. Your spouse, children, or parents can co-apply for the loan.
2. No Processing Fee Refund: Sometimes, the lender may promise the refund of processing fee in case of a loan-rejection. However, the processing fee that is about 0.25% to 1% of the loan amount is generally non-refundable.
If your lender promises a refund in the case of rejection, get the assurance of a refund in writing. Never rely on the verbal agreements from the lender’s representatives.
3. Confused About The Rate Of Interest: Go through the terms and conditions thoroughly to clearly understand the interest rate and avoid any interest hikes in the future. If you are not satisfied with the offered interest rate, negotiate with the lender. Negotiations work well when you have pre-approved offers or a good credit score
4. Wrong Evaluation Of Home: When applying for a home loan, your quotation may not match with the quotation obtained by the lender. Lenders rely on their experts for the property evaluation and do not consider your personal evaluation.
So, there could be a gap between the expected loan amount and granted amount, causing further delays. Hence, to be on the safer side, hire an expert to assess the value of the property.
5. Down Payment Calculation: The lender may not process your loan if you are not ready with your down payment amount. At least 10% to 20% of the property value has to be paid by the lender as down payment and rest can be availed in the form of a loan.
Ensure not to disturb your retirement savings or savings accumulated for other goals in life to make up for the down payment amount. Get a thorough financial plan in place to ensure that all your money goals in life are achieved. Make your home dream come true, but not at the cost of other dreams and goals in life. Approach experts like ArthaYantra to get your finances in order and secure your financial future. Live a happy, fulfilled life!