Tuesday, April 8, 2014

Where to get a home loan

Before buying a home, the first step is to manage your finances to cover the cost. Unless you're required to pay in cash, as is the case with foreclosed properties, most home buyers go through the process of applying for a mortgage loan.

Aside from banks, you may also acquire mortgage loans from the local government, cooperatives and unions.

A mortgage loan is one wherein the house or property you plan to buy is put up as collateral for the loan. Basically, the lender provides the full loan amount, in cash, to be used by the borrower. This principal amount will then be paid by the borrower in monthly installments with added interest over the agreed loan term. Failure to pay the debt will result in the lender ending up with full ownership of the mortgaged property. 

Banks are the usual go-to instituations for home buyers who'd like to get a home loan. Most people are comfortable with dealing with a local bank they already trust and have accounts with. However, when choosing a bank for a home loan, it’s important to shop around for the best deals. One of the key factors to look at is the interest rate. While lower interest rates are generally better, consider whether the interest rate is fixed, and for how long it will be for. Opting for a low interest rate promo may work against you over the long term if the rate goes up after a year or two. 

Aside from banks, you may also acquire mortgage loans from the local government, cooperatives and unions. If you’re a member under the Pag-IBIG for at least two years and not over 65 years of age, you may apply for a home loan with the institution. Other options include mortgage loans from the SSS and National Housing Authority (NHA) Cooperative Pabahay Program. 

If you don’t have much time on your hands to personally assess different loan packages from different banks and institutions, you may also enlist the help of a mortgage broker for a commission fee. His or her knowledge of the market will provide you with an appropriate mortgage loan package that will suit your needs.


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