Many individuals apply for a home loan only to realize that their application is rejected due to some error which could have been avoided. With low-interest rates prevailing in the market, individuals can afford the Equated Monthly Installment (EMI) along with other expenses.
However, one should keep downpayment amount handy as it should be paid from their pocket.
If an individual is looking to avail home loan he should avoid the common and silly mistakes which can lead to home loan rejection.
Here 7 common home loan mistakes to avoid:
Not checking credit score
Individuals home loan application can be rejected if the credit score is very poor. If one is aware that his credit score is poor he can work on it and apply for the same after improvement. CIBIL, Experian, are credit rating companies that divulge credit scores.
So one should apply for credit score after knowing the score.
Not crosschecking about banks
Do a crosscheck about the bank and service who already have a loan account with them. Do not choose the bank only based on interest rate, check with other things such as foreclosure charges, legal charges, processing fee and the likes.
Not going for Pre-approved home loan
The main advantage of taking a pre-approved home loan is that you know the maximum amount that would be sanctioned. There is a chance of bargaining based on the home loan eligibility.
Opting for higher loan amounts
Do not opt for higher loan amount just because you are eligible as per the bank. Check with your other commitments and EMI amount.
Not reading agreement
There are a lot of documents which you have to go through when applying for home loan. See io it you understand all the terms and conditions before signing any document.
Availing new credits
Individuals should avoid falling into credit card debt or opt for a personal loan before applying for home loan. This can hamper your credit score.
Not insuring home loan
It is always better to insure you home if you don't want your family or children to end up paying your EMI in the case of demise.
So it better to be covered with life insurance and critical illness policy so that you only pass home not a home loan.