The process of obtaining Home Loans might have become easier but it’s only available for the candidate who qualifies for it. Everyone cannot avail a Home Loan facility, it is restricted to people who can afford to repay the loan along with the monthly installments and the rate of interest. The Home Loan interests have been brought down in recent years due to various schemes and policies introduced by the government as well as the banks.
The Home Loan interest rates differ from lender to lender based on their requirement. Thus, a borrower must conduct a fine research before he looks forward to applying for a loan. When applying for a loan, we must have a sound knowledge about three things – the loan amount, the tenor of the loan, rate of interest attached to it.
The interest rates are changing rapidly and they are unpredictable. They are favorable right now but weren’t two years earlier. One cannot realistically predict what the rate of interest would be in the next three years with the introduction of MCLR. The rates are much more fixed under MCLR and thus an increase in the rate of interest will bring about an overall increase in the rate of interest.
Not everyone seems satisfied with the conventional Home Loan of 20-30 years; they are more focused on the Adjustable rate mortgage nowadays. One can refer to these aspects as static and dynamic. The conventional fixed-rate Home Loans are static in nature whereas the ARMs are dynamic in nature. More and more people are interested in the ARMs form to secure a Home Loan. There are many reasons for the same such as:
Down payment adjustments: With Adjustable rate mortgage, one can look forward to adjusting the down payments. Similar is not the case when we talk about the fixed-rate of interest where the rates are fixed, under ARMs adjustments are possible.
Easy access to property: Under Adjustable rate mortgage (ARMs) you can avail a one unit property with a down payment of mere 5%. Apart from this if you are looking forward to refinancing, you can also refinance at 5% equity.
Clearing Misconceptions: A misconception about ARM being is being cleared. It was considered by much as risky. But that’s not the case anymore as more and more people understand the adjustable rate concept and are looking forward to availing the same. It is similar to that of a fixed-rate as it offers similar tenure and stability but quite shockingly the rate of interest offered under ARM is less than the fixed-rate. Thus people are realizing this now and their misconception about Home Loan Interest through an adjustable mortgage is getting cleared.
How ARM helps you lower Down Payment?
An Adjustable Rate Mortgage will help you achieve Home Loan Tax Benefits by helping you to save not only the extra monthly installments under fixed-rate but obtain a lower rate of interest as well. The yield curve is much more beneficial presently when comparing ARM with fixed-rates. Even the future looks bright for ARM.
One of the best parts of ARM is that you can achieve your desired property with only 5% of the down payment. This mortgage facility will further enhance Home Loan Down payment procedure and offers flexibility. This will not only help you get away with unnecessary rate security payments but get better service as well.
Before you apply for ARM, make sure you have a decent CIBIL score. A bad CIBIL score will kill your chances to obtain a Home Loan while a good one will not only help you get a better rate of interest but also a high loan amount.