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Tips And Advice For When You Apply For A Home Loan

Dec 16, 2007
One of the most important factors when choosing a home loans plan is making sure of the term. It makes sense when saying that if you choose a longer term to pay off your loan, the lower your monthly payments will get.

Some people prefer making larger payment so that their home loan can be paid off faster and because they believe that their property will increase in value. If you are planning to rent out your property the fact is true that you will more likely have a positive cash flow when you pay off your home loan in a short period. The other method is to increase the deposit you put down.

Advantages of Using Home Loan Brokers

Find the perfect home or property for an investment might seem to be the hardest part in the property transaction, but we believe that finding the best finance is much harder. The reason for this is because today we have so many options when applying for a home loan and there are so many companies claiming to provide the best and easiest home loans. A mortgage broker or bank can assist you in this process and save you a lot of time and probably a lot of money in the end.

Their job is to provide a service that makes it simple and lay out all the terms, interest rates, monthly payments and other factors which will suite your needs. You probably have already found your ideal home and now youre looking for financing, but it you havent it is a good idea to contact a home loans broker so that you can be advised as to what your price range are. You need to find a broker who has lender partnerships with at least 3 companies where they can find the best deal for you.

Risk vs. Reward

What are ARM loans? It is an Adjustable Rate Mortgage which might be perfect for you. With ARM home loans you are able to have a term where the interest rates are fixed. The term can be 2 months or 7 years. They are perfect for first time buyers or people who arent planning to stay in the property for more than 7 years.
It enables the buyer to have a lower initial monthly payment.

The only risk you take is that when you decide to refinance your home loan the interest rate might be higher at that time. It is important to know when to refinance and make use of a fixed rate home loan so that that you can have more security in the long run.

Paying Off Your Home Loan Early

Home loans usually have terms of up to 30 years. That does seem like youll never be able to pay it off. Find a way to make a bigger gap in the principle amount. The most common one is to spend that extra cash you have on your home loan. Even if you have an extra R500 it will still make a huge difference in 3 years.

By making that small sacrifice youre reducing your term dramatically. Another way is to increase your homes value by spending that R500 a month on your home. If youre not sure where the house needs attention, the kitchen and bathrooms are usually the best place. Kitchens and bathrooms make a massive difference in a home.

Say No to Prepayment Penalties

When you choose one of the home loans you applied for, make sure that you ask the lender regarding their prepayment policy. When the day comes when you have enough money to pay off your loan or you would like to refinance it, you dont want to make another payment just because youre paying off your mortgage early.

Prepayment penalties are usually unavoidable when youre a high risk client or a first time buyer, but if it is not necessary then dont sign it. You can save thousands.
About the Author
Peter Owen owns a number of properties and teaches new and existing house buyers the importance of finding the correct home loan. For a home loan application you are welcome to follow these links Home Loans or Mortgage
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