Tips for Applying for a Home Loan

If you are considering setting foot on the property ladder in Singapore in the not-so-distant future, there are a number of factors you must familiarise yourself with beforehand. By failing to do so, you may feel unprepared from the very onset and throughout or find yourself getting overwhelmed by the sheer volume of tasks involved. Continue reading to familiarise yourself with a number of tips for applying for a home loan.

Do your homework

As with any major milestone, it may benefit you to do your homework. The mere mention of the word may fill you with dread but with so many factors to consider ahead of time, it can end up preventing you from making a number of costly and time-consuming mistakes. In addition to finding your forever home, you are also committing to one of the greatest financial decisions you will ever make that is also likely to stay with you for decades to come as you gradually settle into life as a homeowner. As a result, you must ensure you are getting the most bang for your buck and are not being ripped off. In the real estate world, scammers are rife. By researching loans, rates, and brokers in your local area, you can be reassured you are getting the best deal available to you.

Be realistic

During the process of purchasing a home and applying for a home loan, you must be realistic. It may be your dream to become a homeowner, but you must remember to also keep one foot on the ground during the entire process from start to finish. For example, if you are on the hunt for a rate that requires a 20% down payment and you are only able to afford 5%, it may benefit you to figure your calculations based on the rate you are likely to get. By browsing for DBS home loan rates, for example, you can familiarise yourself with the wide range of options available to you and make an informed decision based on your current and future financial situation.

Consider your options

When it comes to applying for a home loan, you must consider your options. This includes researching the types of financing on the market and determining whether or not a 15-year mortgage, 30-year mortgage, adjustable-rate mortgage, or fixed rate mortgage is the best option for you and your lifestyle now as well as into the future. If you are looking for an extra level of safety and security with consistent monthly payments, for example, a fixed rate mortgage may be the best route to go down. If you are wary of fluctuating mortgage rates and are looking for greater flexibility, on the other hand, an adjustable-rate mortgage may be your best option.

Take a targeted approach

During the course of applying for a home loan, it can be tempting to reach out to a wide range of lenders both locally and further afield. By doing so, however, you can end up wasting a considerable amount of time and money. By taking a targeted approach to applying for a home loan, you can protect your credit score. For example, when you apply for a home loan, your credit report can highlight this. If you take a shotgun approach and apply for several mortgages within a two-week period, it may only count as a single enquiry but if you drag out the entire process, it can end up damaging your credit score in the long run. This can lead to a lower rate than you were initially hoping for in the first place.

Boost your savings

In today’s real estate landscape, the vast majority of home loans require a sizable down payment. This can range from 5% to 20%. For example, if your property costs $200,000, you will need $10,000 to $40,000 in savings. As a result, you must boost your savings if and when you can during the process of applying for a home loan. If you end up opting for a less than 20% down payment, you may also be expected to pay mortgage insurance to protect your lender in the event of default. If you find yourself struggling to save for a down payment, there are a number of steps you can take ahead of time. This includes cutting back on non-essential purchases, opening an automated savings fund, and budgeting your daily, weekly, and monthly spending.

If you are in the process of applying for a home loan, there are several tips and tricks you should familiarise yourself with. This includes doing your homework, being realistic, considering your options, taking a targeted approach, and boosting your savings. By doing so, you can increase your chances of streamlining the entire process from start to finish and benefiting from a stress-free move.

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