How to buy a house | Home loan guide

Mortgage is an official permission or a contract, where a person borrows money or a loan from an organization or a bank. The document states the terms and conditions to pay back that loan over a period of years. One has to give collateral or an asset to get that amount or loan.

Most people spend their lives working from 9 to 5 and dream of making a house when they have saved something or when they are in a position to pay back a loan which will help them take immediate steps to construct or buy a house.

Following the steps below, you will be able to buy a house:

  • Buying a home is better than paying rent. The smart move can be: Buy the house with the help of a loan and keep paying the installments instead of giving rent.
  • Buy the house you can afford, not something you cannot afford and put yourself in trouble. You need to know the upper limit of what you can give. Look for houses you know you can afford. Work out or calculate the monthly payment you can give and plan the next step.
  • Let’s assume you have no debts and you want to buy a house with the help of a loan. Do you have some savings for the down payment? For example you like a house and want to buy it. The bank will loan you 70% of the total amount of the house, you need to have the 30% for the down payment. For that you need to have savings. There was a time when the loans lead to mortgage lending crisis. People lost the assets when they couldn’t pay the installments.
  • Banks, today do not make zero down mortgages, they never did in the past either.
  • Don’t put yourself into trouble by selecting an expensive home you won’t be able to pay an installment for because if you did you will not be able to get through on getting the house but will also lose the asset set for the mortgage. This is called foreclosure.
  • If you want a flexible loan repayment, choose a long-term payment plan. The bank or institution when gives mortgage, adds the interest to the monthly installment plan calculating how much it would be, it’s the fee you pay for getting the loan. That interest or fee is the profit the bank makes.
  • To get loan from a bank there are a few things you need to possess: Money for down payment, at least 2 years of stable banking history for the bank to trust you that you are in a position to give the monthly installments. A good credit score, and your monthly salary or income which should be at least 2 times higher than the monthly payment you have to give.
  • If you have all 4 of these, you qualify for the mortgage plan.

Once you pay the loan, you also need to pay off the closing costs, like the approval of the documents, fees, broker’s commissions. Completing this successfully, one becomes a home owner.