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5 Must ask questions before signing a new home loan

new home loan
new home loan

Buying a new property and building your forever home is quite an emotional step. It brings out the excitement on having your own house as well as the anxiety from the spending a huge sum just for the development alone. To ease some of that anxiety and make everything easier, getting financing support through a home loan is one of the ideal ways to pay for the expenses.

But before you sign any papers, ask yourself these important questions before choosing a new loan.



1. Which home loan is best for me?

You need to consider which type of loan is best for you. Given your situation, you may ask your reputable lender what they can suggest. They will dutifully find out more about you so you shouldn’t be afraid to share some information, especially your credit report and financial capabilities. If your lender knows about your current standing, then he or she will be able to provide better assistance. This already gives you a sense that the lender will recommend a more personalized and particular type of home loan for you or even give you substantial advice to help you decide if whether or not the new loan you will be choosing is really what you need as of the moment. To give you an idea on various home loan options, follow this link to learn more about home loan comparison.


2. How much do I need to borrow?

Before choosing, you will need to identify your budget and determine how much you should really spend on the new loan. Because ask yourself this beforehand, can I afford to make monthly payments after getting a loan? If you find that it may be a bit difficult to be consistent with your payments, borrowing money will most likely feel like a burden on your savings budget.


3. What is the interest rate?

By talking to your lender and identifying loan options, ask for the ballpark rate that you qualify for. From there, you will have a general idea about the annual percentage rate (APR). In addition, you should ask if they charge for an interest rate lock so the rate doesn’t get affected whether it increases or decreases based on market trends


4. Does my loan come with any prepayment penalties?

Depending on the contract, some may have prepayment penalties applied in its terms & conditions that take effect in a specific set of years. So, dutifully ask and clarify these costs and fees with your lender. Penalties come from paying off the loan earlier than the agreed period term.


5. Should I apply for mortgage insurance?

Lenders may require you to get mortgage insurance for your loan as protection for your property in an event of natural calamities and fires. Ask how much it will cost and its form of payment – upfront or on-top of your current monthly payment. You may also ask your lender if there other options that don’t require mortgage insurance if you see that it won’t be necessary.

Make sure to keep a note of these questions that you can ask you're possible lenders so that you have all the vital information to proceed with a new loan.


Ref:
https://www.nerdwallet.com/blog/mortgages/13-mortgage-questions-to-ask-your-lender-and-the-answers-you-want-to-hear/
https://www.wisebread.com/ask-these-4-important-questions-before-signing-any-loan
https://www.securitybank.com/blog/home-loans-101-crucial-questions-ask-loan-officer/

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