Buying a home is one of the biggest motivations for many of us to work hard and save money. Buying a home is indeed a big deal as it comes with a big financial commitment. You have to analyse your financial capability and need to make your plan according to it. As per the current inflation, buying a house through your savings is quite tough and this is the reason why 90% of people go with home loans to fulfil their dream. The process is lengthy and starts with finalizing a property as per your affordability. The next step is followed by finding a suitable lender and applying for a home loan with them. Whether you will get qualified for the loan or not depends on the lender’s eligibility criteria which are based on the applicant’s age, income, job stability and loan repayment capacity.
Here eligibility criteria play a vital role as a home loan is a bigger commitment loan which comes for the longest tenure ranging from 10 to 30 years. Hence the home loan providers become much stringent and strict while approving home loans.
Being a home loan seeker, it is advised to take some preparatory steps. To get qualified for a home loan you need to do some homework in terms to get smooth approval for your home loan application.
Here are a Few Tips to Get Qualified for a Home Loan at the First Attempt-
Make Budget for the Total Homeownership Cost
The cost of a house is not the only expense that a home buyer has to bear while purchasing a home. There are many additional expenses that one needs to pay while purchasing a home. A home loan doesn’t include these charges and one has to bear these charges themselves. These include registration fee, stamp duty charges, paying charges to the municipality, and GST as well. So while making the budget for a home purchase all these expenses also need to be considered.
Enquire about your Credit Score
Your credit score is the numeric expression provided by the credit bureaus to each individual which is based on your credit history representing your financial health. And it ranges from 300 to 900. A credit score above 700 is considered good and represents you as a high potential customer with high creditworthiness. Hence it becomes important for an applicant to check his/her credit score before applying for a home loan. In case the applicant finds the score low, they should take considerable steps to improve it before knocking the door of a lender. Doing this will minimize the risk of rejection.
Make Your CIBIL Report Error Free
Your credit report may contain errors. The credit bureaus update the credit report from time to time as per the updates provided by your lender. Hence, even a single missing update from your lender can negatively impact your CIBIL. If you find any of the flaws in your credit report, you can report it to the credit bureaus and request them to update it. Doing this will ensure an error-free CIBIL and will bring you one step closer to your home loan approval. As along with the credit score, the lenders do check the credit report too, hence keeping it free from errors quite essential.
Get Pre-approved for the Home Loan
One of the best ways which assure you that you will get the loan is getting pre-approved for your home loan. Being pre-approved depends on your repayment capacity and once you are sure about your budget everything becomes quite easy with a pre-approved home loan. As you can get the disbursal of the loan amount anytime within one or two with a pre-approved home loan.
Fix your FOIR
Along with the credit score, the lenders always consider the FOIR. The FOIR stands for Fixed-Obligation-to-Income which is a ratio of net monthly income and the total payment of all the loans. If the ratio is 50 or more, the lenders generally reject the application. So before you apply for a loan, you should check the same. If your FOIR is 50 or above, it is better to close a loan or pay credit card due so that the ratio decreases.
Be Prepared for the Down Payment
The home loan never covers the full price of the property. You need to pay some part of it from your pocket which is known as the down-payment amount. The maximum amount one can get from a home loan is 80%-85% of the property price. The remaining 15 to 20% is covered under down payment. Since the property price is high even arranging 20% of it becomes difficult for many of us. Being prepared for it makes the loan approval easier.
Purchasing a home not only indicates your financial stability but also has many emotional values such as a sense of security, feeling of pride, stability, and so on. So step ahead and start planning to own the home of your dreams. But make sure that the excitement of buying the first home should not make you oversee the preparation for the home loan. So to be prepared and ensure a smooth home loan approval follow the above-mentioned steps.