Create A Home Loan Checklist

The Importance Of Creating A Home Loan Checklist

home-loanChoosing the right home loan for your needs can be complicated. However, developing a “Home Loan Checklist” can make the process of getting a mortgage much easier, regardless of whether you are planning to:

  • Purchase your first home
  • Purchase an investment property
  • Build a new home
  • Upgrade or renovate your existing home
  • Refinance your current mortgage
  • Consolidate your debts
  • Cash out/ equity release
  • Apply for other loans

If you are short on time and even patience, a mortgage broker can help you unravel the complexities of home loans.

Ask for a Copy of the Lender’s Key Facts Sheet.

Before making your checklist, request a copy of the Key Facts Sheet from each potential lender or credit provider you are considering. This sheet contains a significant amount of important information including:

  • The total amount to be paid back over the life of the loan
  • Any fees and charges payable
  • The individual repayment amounts and payment options
  • The comparison rate (This will allow you to check the total cost of one home loan against loans offered by other mortgage brokers.)

What Should be Included on the Home Loan Checklist?

As the most important things to consider when choosing a mortgage provider, the following things should be included on your checklist.

  1. Interest Rates

First, it is critical that you understand that there are various types of interest rates. They include:

  • Variable Interest Rate Home Loan: This rate will increase or decrease depending on marketplace rates.
  • Fixed Interest Rate Home Loan: This rate allows you to lock-in (fix) an interest rate for a specific period of time.
  • Split Loan Home Loan (Combined Variable/ Fixed Interest Rate): This is the most flexible option because it allows you to divide your loan into a number of splits. For example, you can arrange for one split loan as a fixed interest rate and another as a variable interest rate.
  • Introductory (Honeymoon) Interest Rate Home Loan: When you initially take out a loan, you may be offered a lower interest rate for a short (honeymoon) period of time. When this length of time is over, the loan will automatically revert to a standard variable rate.
  • Comparison Rates: Remember this can be found on your Key Facts sheet. This will help you compare the total cost of one loan against another. It takes into consideration your interest rate, any potential ongoing fees, and the application fee, which may be referred to as the setup, upfront, or establishment fee, visit https://studentaid.ed.gov/sa/types/loans/interest-rates to understand how interest rate is calculated.
  1. Repayment Options

This requires you to take a good look at what your repayment options will be. They may include:

  1. Additional Repayments:

This tells you whether or not you can make extra payments in addition to your required minimum monthly repayment amount.

  1. Redraw Facility:

This information is also covered on your Key Facts sheet and refers to whether or not you can make additional lump sum payments that exceed your required loan payments. It is also important to determine whether or not you will be able to later withdraw (redraw) these extra funds from your loan when you may need them. There are instances when a lender will not allow you redraw your funds when you want them.

  1. How Often is Your Payment Due:

Check to see if you can elect to make your payment weekly, biweekly, or monthly. Making your payment weekly or biweekly may allow you to pay off your loan more quickly.

  1. Fees and Charges

To ensure you know the true cost of your home loan, you will need to know all the details, such as any fees/ charges you may be responsible for. They may include:

  1. Application Fee (Also Known as Establishment, Application, Startup, or Upfront Fees):Be sure to find out the details regarding an application fee, which is charged by finance lenders to partially or completely cover the cost of establishing a loan.
  2. Exit Fees: This refers to any fee your lender may charge if you choose to pay off your loan early. Though this amount varies from one lender to another, it is usually between $250 and $300 that is due when you pay off the loan. However, be aware that there may be additional fees that you should have a clear understanding of before signing any contracts.
  3. Break Costs: Some lenders may charge a break fee if you end a fixed rate contact before it is scheduled to expire. Typically, you are charged break costs when market interest rates are lower than they were at the time the loan was secured. Per chance, the interest rates are the same or higher, you probably won’t be charged.
  4. Ongoing Fees: This simply refers to any ongoing account maintenance fee that can be charged against your loan. They are typically charged monthly or annually.
  5. Additional Charges: Be aware of any potential additional charges that you may be required to pay. In addition, determine whether or not these fees must be paid upfront or if they can be added to the loan.

Selecting an appropriate home loan that will meet your needs is a significant financial decision. Never make the mistake of rushing into things too quickly! Take the time to shop around for a suitable home loan, while thoroughly doing your research and reviewing all the facts before signing on the dotted line.

Keeping your finances under control and being vigilantly frugal will always ensure you’re financially healthy and won’t need the services of instant cash loans type lenders.

Don’t be Afraid to Seek Expert, Professional Advice.

Just because you have a basic idea of what should be included on your home loan checklist and why it is important doesn’t mean you should forgo expert advice from a qualified mortgage broker. He/ she can help you create a personalized checklist, while also saving you the time, effort, and frustration of trying to figure out everything on your own. Best of all, they are almost certain to know which mortgage lenders are offering the best interest rates and are the most negotiable.

 

Choosing the right home loan for your needs can be complicated. However, developing a “Home Loan Checklist” can make the process of getting a mortgage much easier, regardless of whether you are planning to:

  • Purchase your first home
  • Purchase an investment property
  • Build a new home
  • Upgrade or renovate your existing home
  • Refinance your current mortgage
  • Consolidate your debts
  • Cash out/ equity release
  • Apply for other loans

If you are short and time and even patience, a mortgage broker can help you unravel the complexities of home loans.