Procedure of Getting Home Loan
Purchasing a home is one of the most important decisions a person has to take during his life. A home loan is a crucial part of any home buying attempt. It is unusual to find someone who pays the entire cost of home at one goes. Taking a home loan is a long journey, which involves many stages. If you want to buy a home against home loan, you should familiar with the process and the documents required for the home loan. It is advisable for you to first look at the different stages required for obtaining a Home Loan.
The home loan process can seem complicated and frustrating. There is a lot of paperwork involved. Following few steps can make easy procedure of getting home loan:
Preparation for the Home Loan Process:
Beginning the home loan process is to become a familiar with the different types of loans, rates and terminology. You should go through the local newspaper’s real estate section and browse online mortgage broker sites that offer information about loans. After getting idea of home loan, Make a list of any questions you might have about the information you find.
Find the Right Lender:
The most important step you can take in the home loan process is to find the right lender and loan officer. It is the loan officer’s job to guide you and your loan file smoothly through to loan approval. He should be knowledgeable, experienced, responsive and prompt, as well as willing to take the time to answer questions, explain the loan process, programs and terms. Make appointments with several loan officers and choose the right lender.
Application for Home Loan:
The process of getting a home loan starts with a formal application for the loan. The application form requires certain basic information about you. Though the requirements may vary from bank to bank or lender to lender but there are certain things which every bank/lender will ask.
Along with the Application form, the valid documents like Income proof, Age proof, Address proof, Identity proof, Bank statements etc. must be supported. The income documents and bank statements provide vital clues to the bank regarding your financial health. Also with all these documents the bank/ lender will for processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.
Evaluation of Application with Personal Discussion:
After applying for the home loan and submitting the processing fees, the bank evaluates your application, decides in principal about your home loan and requires a personal meeting with the bank officials. It is advisable that you carry all your original documents of whose copy you have submitted along with the application. This decision for personal interaction can be taken within 2-3 days of submitting a complete application. The purpose of this personal interaction is to know more about the borrower and his repayment capacity.
In this process, qualified representatives are sent by the bank to your office and place of residence to ascertain the facts. This is the essential part for the banks to establish the trust with the applicants. This is initiated – to confirm and validate everything stated in the application form. The references provided in the application are cross checked and verified.
Approval for the Loan Application:
This is the most vital part of any home loan process. The banks will forms repayment ability based on your income, age, qualifications, experience, employer, nature of business etc. The bank can refuse your loan application is any discrepancy is found at this stage. But if everything goes according to the conditions negotiated by the parties then the bank approve the loan that may be unconditional or with some conditions levied.
Offer Letter by Bank:
After the sanction of the Home Loan, the applicant gets offer letter from the bank with the details like Loan amount, Rate of Interest, fixed or variable ROI, Mode of repayment, General terms and conditions of the loan, Special conditions, if any etc. If you agree with all the facts mentioned in the offer letter, you will have to provide an acceptance copy to the bank. This is generally a duplicate of the offer letter signed by you, provided to the bank for its records. If the bank charges any Administrative fee, it will have to be submitted at this stage.
Property Verification Process:
Even after all this long process, the home loan is still not yours. Now the bank will raise the question about property you want to purchase. The home loan is a secured loan with the property being used as the security. So, to get the home loan you must submit the original documents of the property to the bank. The title deeds, no-objection certificates and other documents required by the bank are to be submitted in original and the bank keeps them safely until you repay the entire loan amount.
If the property is under construction, the banks verify the stage of construction, quality of construction, progress of construction, locality etc. and evaluate the property on established parameters. The banks have qualified valuators, which assess the value of property on various parameters for home loan amount.
Registration of Property Documents and Submission of Post-Dated Cheques:
After the legal and technical valuation of the property it is needed that the draft documents have to be cleared by the lawyer and stamping and registration of the documents. Now after registration, signing the final agreement of the home loan is another step. After the signing of the agreement a bunch of postdated cheques are to be submitted as agreed on the agreement paper.
Disbursement of Loan Amount:
Now it’s a final stage in home loan process. After the bank ensures financing the property is involves no risk they pay the final amount that is agreed upon. The mode of payment varies from full to part payment. In the case of under construction property the mode is part payment and in the case of ready possession properties disbarment is full.Google+ image
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