21 October 2010
Upfront Payments on Home Loans –Fixed Amount or Negotiable
An upfront payment is money given before applying for a home loan. These may include taxes, administrative fees, transfer agreements etc. All this put together makes a substantial amount and one must be prepared with this amount before going in for applying for a home loan. Let us learn more about these payments which are not talked about openly and nowhere do advertisements claim any discounts on these.
First of all let me inform you that these figures are negotiable and depends on every individual lenders rules. Every financial institution advertises and promotes of low interest rates but do not mention about upfront payments. They may have certain fixed charges about loan amount processing and other administrative charges but they are very well willing to negotiate on this amount. Usually we are not aware of this and we take their word as fixed charges and are willing to pay them this amount which is not included in the price of the home. The home loan dealer shows certain percentage of principle amount has to be paid as down payment , transfer charges and other charges and taxes extra. We take their word and even thought hey may be unrealistic charges we accept them and pay them the required amount. Our focus is on purchasing of a new home and loan approval. Every individual whether salaried or self employed wants approval of the loan and so we dismiss these thought and move ahead.
Upfront payments amount is negotiable and for this one must take a thorough survey of the market. Find the value of the home, price per square foot area in that locality, what discounts other builders are offering, interest rates prevalent for home loans in that area, and also various financial institutions that offer home loans. Summarizing all these points together and understanding various procedures for application of home loans helps an borrower to get the best deal while purchasing a new home.