Ravi Chandran
Home loan problems are likely to crop up for most people when they are hunting for that perfect new or next home
So, you’re looking at home purchase, a financial decision that will likely be the biggest you’ll ever make. Assuming you’re not as rich as Donald Trump, it’s likely you will need to obtain a mortgage for home purchase.
In order to avoid home loan problems and to make an informed decision, you should educate yourself about the mortgage process.
There are several steps you should take before you even begin shopping for your new home. But the first thing you should do before that home purchase is to pull your credit report.
One of the first things a mortgage broker or lender will do when they receive your loan application is to obtain a copy of your credit report. If there are errors or discrepancies on your report, it could delay your approval process, it could cause you to be viewed as a higher risk resulting in a higher interest rate being charged or it could even cause your loan application to be denied.
You can avoid these potential home loan problems and save valuable time by making sure your report is accurate before you begin the mortgage process. If your report is not accurate, you can take the necessary steps to correct the errors so that it doesn’t cause problems during the mortgage process.
Once you have an idea how much you believe you can afford for the home purchase, get pre-qualified.
A pre-qualification is an informal agreement between you and a broker or lender. The broker or lender will provide you with an amount it believes you would qualify for based on basic information you provide to them such as your income and expenses. A pre-qualification is not a guarantee that your loan will ultimately be approved. Having a pre-qualification will give you a better negotiating position with a seller.
To avoid home loan problems, shop around
Visit your bank and speak to a loan officer to see what kinds of loans are available and at what rates they are being offered. Look in the real estate advertisements for the rates that other lenders and brokers are offering. Also, use the power of word-of-mouth. Check with friends and family who have obtained mortgages in the past and ask whether they would recommend the company they did business with. Understand that you have a choice of using the services of either a broker or a lender.
Lender
A mortgage lender will lend you the money directly and will make the decision as to whether to approve your mortgage and extend you credit. A lender could be a bank or another company whose business is to make mortgage loans. A lender may have a limited number of loan products to offer you. With a lender, you are not dealing with an intermediary; you are dealing directly with the company who is responsible for making the credit decision on your loan. Lenders also have the ability to act as brokers, so you should be sure to ask what capacity they will be acting in when deciding whether to use their services.
Mortgage Broker
A mortgage broker is an intermediary who can deal with a number of different lenders to obtain your loan. They have the ability to make inquiries to those lenders on your behalf in order to obtain a loan product that best fits your needs.
Mortgage brokers also have the ability to work with “wholesale” lenders. Wholesale lenders will only accept applications from a mortgage broker, not directly from a borrower. An experienced broker may also be able to find a lender for you if you have special financing needs or if you can’t find a loan by dealing directly with a lender.
Typically, a mortgage broker earns their fees based on the loan amount. They often receive compensation from the lender as a “yield spread premium” for placing the loan with that lender. It is important to keep in mind that although a broker is acting on your behalf, they are not your agent. The terms you are offered may not necessarily be the best terms that may available to you.
This is why it’s very important for you to do your homework and work with reliable and trusted mortgage brokers who have been in the industry for a long time. Trusted names in the mortgage brokerage industry would be able to help you to compare rates and loan products to insure you’re getting the best deal.
How do I avoid home loan problems and secure mortgage quickly?
If you are planning on buying a new private home but unsure of funding you should speak to a mortgage broker who can set you up on a path where you can get a home loan in a quick and seamless manner.
Good brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs.
You should also check out affordability tools which can help you make better property buying decisions. Mortgage calculators for example, can help you ascertain the fair value of a property and find properties below market value in Singapore.
Whether you are looking for a new home loan or to refinance, a mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all their services are free of charge.
