Saturday, November 2, 2013
Home Finance - A Corridor to Dream Fulfillment
The relevance of home finance is that people need not make full amount needed to build or purchase a home i.e. they cannot afford to make a large, lump sum cash payment at the time. Therefore, they take help from a bank or any financial institution for that matter. The full cost of the loan, usually called a mortgage, is based upon the principal amount borrowed and interest rate charged to use the money and the home finance provided by money lending or banking institutions, is referred to as a mortgage.The common repayment for home finance is usually 15 to 30 years for which the monthly payment is calculated as a part of the principal, or amount of the loan, and the interest rate charged on that principal.After a certain period of on-time payments by the borrower, it may be possible to refinance a high-interest loan with a lower interest rate.It is to be noted that there are primarily 2 types of mortgage loan - an adjustable-rate mortgage (ARM) and a fixed-rate mortgage, the former has a fluctuating interest rate based upon changes in market rate and the fixed-rate mortgage has the same interest rate throughout the life of the loan. If home finance interest rates are high at the time of signing the mortgage contract, it may be beneficial to consider an ARM.Owning a house is a dream for every human being. Economic liberalization and competition among retail finance companies have made it easier for clients to secure a loan. However, there are eligibility criteria to be met to secure home loans and it is totally based on the amount of income that you draw as salary i.e. you cannot get any amount of home loan irrespective of your income.The amount of the loan given by financial institutions depend on lots of factors like your income, age, qualifications, work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc.To get any home loan you need to have certain documents to support the deal. Self-employed and salaried people require different documents to support the deal.The borrower must submit the following documents along with loan application proof of age, proof of identity and residence - passport, PAN card, ration card, voter ID card, etc. Salary slip of last three months along with salary certificate, proof of continuity in the job for last two years or Form 16, bank statement for last six months, Company profile for employees of a private limited company, proof of business address in respect of businessmen, latest property tax paid receipt, sanctioned plan, receipts towards payments already made, sale agreement and title documents in favour of the seller, sale agreement or construction agreement with builder.