Buyer’s Guide to First House Loan Applications
What are useful tips to get approved for a home loan?
- Check Your Eligibility
- Assess Your Finance Capacity
- Prepare Your Documents Ahead
- Weigh Your Loan Options
- Reasons for Being Denied
Do you dream of owning a residential house and lot for sale in Nueva Ecija? Acquiring a house or property in the country can be relatively expensive. With property ratings and pricing rises, it is a smart option to seek aid from financial institutions like PagIbig financing, SSS housing loans, and commercial bank loans. For first-time buyers and borrowers that have been denied by a lending institution, here are some useful tips to be approved for a house loan.
Check Your Eligibility
Most importantly, you must check your eligibility to apply for a housing loan. In planning to apply for a housing loan, a checklist of qualifications must be greatly considered.
- You must be a resident of the Philippines.
- You must be between 21 and 65 years old upon loan maturity.
- For OFWs, a special power of attorney or certificate of employment (COE) that is approved by the Philippine Overseas Employment Administration (POEA).
Assess Your Finance Capacity
In assessing your financial capacity, you must not only consider your monthly income but also bear in mind your assets and liabilities. This will allow you to project a possible down payment for a housing loan. Here enlisted are aspects of a housing loan you must take into account as they are evaluated by lenders.
- Monthly payment – it is important to bear in mind that your monthly income should be at least three times your monthly payment. In this manner, lenders will be confident you have the capacity to cover and pay for your loan.
- Down payment – the down payment you can pay to determine the price of the house you can afford. Typically, financial institutions require a down payment of at least 20% of the appraisal value of the land or property.
- Credit history – your credit history will prove your capacity to repay your debts. Banks and lenders share information on delinquent borrowers. The history of non-payment remains a red flag. Make sure you clear out your credit history before requesting loans.
- Debt service ratio – this ratio is the monthly take-home pay that will go directly to your monthly amortization.
Prepare Your Documents Ahead
Preparing your documents before heading to financial institutions can save you from the hassle of going back and forth due to incomplete requirements. Typically, lenders exercise rigid conditions in loan applications. They do not accept borrowers with incomplete documents on hand. While others accept documents to be followed up, it is best to make sure you are equipped beforehand. Document requirements vary from lender to lender. Here are some of the common and necessary documents briefly explained.
- Application Form – you may find downloadable application forms found on the lending institution’s website.
- Proof of income – the documents included are annual income, payslips, income tax returns, and bank statements.
- Government-Issued IDs – the most common IDs accepted are the passport, driver’s license, postal ID and senior citizen card.
- Supplementary Documents – for married applicants, it is substantial to bring a marriage contract as well as baptismal certificate and NSO birth certificate.
Weigh Your Loan Options
Learning about the loan options available will assist you to choose the most suitable financing for your budget, term needs, and preferences. Before you proceed to weigh your options, you should be able to recognize the types of housing loans. The two types of housing loans are conventional and flexible.
- Conventional or Fixed – this type of loan requires borrowers to secure a fixed payment over a specific duration of time. A payment scheme has been provided to borrowers to allow them to track and plan their budget ahead.
- Flexible – this type of loan is commercially available in banks. As the name suggests, a borrower is in control of the interest rate that highly depends on the number of deposits.
Conventional and flexible terms must depend on your capacity to pay the loan amount. You must have an idea of the type of housing loans before you head to financial institutions. This way, they will be able to assist you according to your needs.
It can be quite challenging to choose the right financial institution. The three most common house financing options are developer’s in-house financing, bank financing, SSS and Pagibig financing or housing loan.
- In-House Financing – this type of financing is offered by land and property developers to borrowers looking to purchase a house through an installment. In-house financing typically requires bigger down payments and imposes higher interest rates compared to other housing loans.
- Bank Financing – this option is offered by commercial banks. It has the most competitive interest rates and proves the most flexible housing loan options. The downside of bank financing is the strictly enforced conditions. Included are significant incomes to ensure the bank that you can pay and down payment.
- PagIbig Housing Loan – programs under this type of financing option allow borrowers to enjoy owning a house in lenient conditions and generous terms. One of the most availed programs provides borrowers the opportunity to purchase a residential house and lot, acquire a fully developed lot under 1,000 square meters as well as establish a house on a lot that was previously obtained.
- SSS Housing Loans – similar to Pagibig financing — SSS offers programs tailored fit for the capabilities of borrowers. They provide low-cost housing, home loan assumptions, and home improvements. An SSS housing loan allows you to purchase a lot where a house can be constructed as well as acquire an existing residential house and lot.
Reasons for Being Denied
There are several reasons why an application can be denied. The reasons vary from one institution to another. Lenders typically deny an application when they are unconvinced the borrower can pay for the amount asked for. Another is that you did not qualify for criteria such as age and residency requirements or perhaps you failed to submit the necessary documents on time.
Housing loans include the acquisition of fully developed land. Lenders allow you to enjoy possessing a residential house under generous yet rigid terms and conditions. With the number of options that you have, from PagIbig financing to commercial bank housing loans, you will never run out of support. Make sure that before you visit any lending institution, you learn the nitty-gritty of applying for a housing loan. This way, you enjoy a more significant chance of getting approved.