A perfect home needs to have the best location, size, price, and builder. Scouting some good options can get you an ideal home for your loved ones. Buying a home is a dream people have had since their childhood. It is a big decision and you need to start preparing yourself early. Now that you have arranged a good amount of money for a down payment, it is time to get a home loan. What is a home loan?

A home loan is an end-specific loan to buy a home. There are various formalities and eligibility factors that one needs to meet in order to get approval. Individuals availing of a loan for the first time need to keep in mind various things. A home loan includes a huge sum of money, so the application is approved only after a lot of things are considered. The main idea is to ensure that there is no past debt history and also to check the future financial stability to repay the loan. When you are considering a loan, you need to act on the factors that can get your approval easily.

What is a home loan?

To start with, clear the doubt of what is a home loan? A home loan is a huge sum of money granted by financial institutions for purchasing a home. One can get hold of a home loan when he or she meets the eligibility criteria. The one-time fund disbursement allows you to purchase the home easily. It is a long-term loan because of the huge amount of money involved in it. The repayment is flexible and easy with equated monthly installments so that you can comfortably pay all the EMI without many hurdles. If you need a home loan, you need to do a down payment and get hold of it. Use a home loan EMI calculator, to make the right decision.

What are the factors of eligibility criteria?

Age:

To start with the basic eligibility that will count for approval is age criteria. There is a criterion for age and it is 21 years in India. One needs to be 21 years of age at present, to apply for a loan. This is the same for all the financial institutions that you try to get a loan from. If you need a home loan, you have to wait for this age and then go for it.

Credit score:

A credit score is a lot more than some digits. It is a representation of discipline and financial prospects along with your past credit history. This score helps in understanding if you are liable to get home. All your past debt and credit activities are considered and then with the help of this score, a decision is made. If you need a home loan approval easily, you need a score of more than 750 to be precise.

There are chances of improvement, but that takes a lot of years and is not an overnight miracle. By paying bills on time, keeping accounts open for long, not keeping any overdue, and not applying for multiple loans can give you a good credit score. A home loan needs a good eligibility criteria proportion, and one needs to meet it. If you need a good experience, you have to show how stable you are in terms of finances.

Income:

Since the main motive of the eligibility criteria check is understanding whether a borrower will be able to repay or not, income is always an important factor. An individual with a good income has no issue with paying the EMI monthly and being a default. A loan provider will always look for borrowers with good income, as they are an asset. If you are having a good income, you have already won a good battle. Once you prove that your income is sufficient to meet the debt repayment along with all expenses, you are good to go.

Down payment:

While a home loan is the biggest support one can have for purchasing a home, the down payment needs to be done by the owner. If you want your loan to get approved, you need to make sure that you arrange the down payment in time. If you arrange it, this will convince the loan provider about your financial stability. Make sure you do not end up asking for help regarding the down payment as well, as that can be a red signal.

Documentation:

This is very important to start and end. Your documents should be in place and in the right order. You must get hold of all the documents in the right order so that you can get the best way out. Nothing will be initiated without the documentation process.

Also read: “How can retirement planning benefit you?

Finishing up

From ‘what is a home loan’ to finding ways to get approval, you are now a pro at it. Make sure you keep a home loan EMI calculator handy to make sure you are making the right approach and decision regarding borrowing.

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