Home Loan Pitfalls That You Need to Avoid

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Getting a loan for your new home might be the biggest debt that you will have to face in your whole life, but it is worth it since at the end of the day, you will have a house of your own. The thing is, everyone wants to have their own house, and thus, everyone applies for a home loan. This can affect the chances of your loan getting approved to a great extent.

The best way to ensure that your application will get selected amongst thousands of others is to make as few mistakes as possible. A person who is aware of the field and is thoroughly informed will be able to get satisfactory home loan rates since he/she willbe less liable to make mistakes. Therefore, it is important to avoid the following Don’ts at all costs.

Do not follow recommendationsUntitled

Although your friend may be very reliable, the individual he/she referred doesn’t necessarily have to be the same. You must never blindly follow a person’s recommendation since it is you on the receiving end. You need to take at least 5-10 recommendations into consideration in order to make the right decision. Comparing and assessing your choices will enable you to make a wise decision. Choosing the first possible recommendation is not the wisest way to go about it. Not only will this put you at a big risk of fraud, but can also ruin you dream of buying your own home.

Do not apply for other loans

Those who are applying for a home loan must not apply for any other loan once the application has been sent. Applying to too many institutions and opting for a variety of loans can complicate and confuse the situation. For example, if you are intending to get a home loan, do not apply for a car loan beforehand.

Making two investments at once can result in a cost that will be too much for you to bear. Moreover, all loan agencies check for credit history before approving your application. So if your debt history contains a pre-existing car loan, you are less likely to be given a chance since they will consider you as a liability to an institution. If you have more debts, it may be wise to do apply for debt consolidation, it will reduce your monthly payments.

Do not apply to one institution

Just because it is a highly popular and reliable institution, it does not mean that you must invest all your effort and time on it. Limiting yourself to a single bank or loan agency can greatly reduce your chances of buying a new home. The amount you borrow will be same for all banks, the difference lies only on the interest rate that you pay. Applying to multiple places will enable you to find a place that will give you the lowest interest rate for the same value that others give. This way, you can reduce the amount you pay every month to the bank which will allow you to save a lot of money on the long run.

Do not cheat

Using cheap tricks and techniques to get your loan approved is not only unwise and stupid, but it is also illegal. People who are too desperate, sometimes, falsify their documents to make them look more eligible for the loan. For instance, some people alter their debt history or employment records to show a more stable financial situation. You can be charged for felony and can be put to jail for such a crime. So do not take such decisions regardless of the severity of the situation.

Untitled2Do not start house hunting

Until you get your loan approved, you must not look for houses. While some may consider to this be unwise, it is actually the best decision that you can make. Looking for houses is a time consuming process. During this stage, your priority must be the loan approval. You will have to stay focused in order to get the job done. Even if you find the perfect house, you will not be able to purchase it until your loan is approved. Therefore, do not talk to your real estate agent until you know how much you can afford.

Following these instructions will definitely help you to make a cost-effective purchase since you will be able to find a loaning service that will suit your requirements and thereby make your new home a less of a headache.