You had struggled for many months to earn enough money to pay for the basic expenses of your family. Now that your business has improved, you no longer need to stay in a rented house. Apart from that, living in a rented has several problems. Is there any assurance that the present property owner will not sell his property to someone else, leaving you as a sitting tenant? In such a scenario, the new property owner might ask you to sign a new tenancy agreement. In case you do not agree, and in the scenario that you are a fixed term short hold tenant, the new proprietor might send you a notice to vacate the premises at the end of that term. Therefore, it is always better to purchase your own home. However, what can you do if you do not have funds to purchase the property immediately? Other persons might purchase that property if you do not buy it soonest possible. In such a scenario, your best option is to apply for a home owner loan.
How is it possible
You can purchase the property by seeking loan from a financial institution. In such a case, you will have to mortgage your new property. Mortgage means signing a legal agreement between you (the mortgagor) and the lender (the mortgagee), be it a bank or any other financial institution. In this case, the lender will take title of your property, along with a condition that the conveyance of the title becomes void once you have returned the principal amount and the accrued interest. This agreement ensures that the possession rights and usage of the property remains with you. However, the lender has the legal right to take possession of the property, in case you do not adhere to the repayment agreement.
Getting pre qualified is the first stage of the mortgage procedure. You have to supply details of your financial status, inclusive of your assets, income, and debt to the mortgagee. Since you run your own business, you do not need to show your salary statement and the company you are working for -- this option is required for employed individuals if they want to take a loan for purchasing a house. The lender will evaluate your documents and provide you with an idea of the mortgage amount you qualify for. It may happen that the amount offered by the lender does not cover the entire amount required for purchasing the house. In such a situation, you will have to finance the remainder on your own.
Pros and cons of mortgage
The biggest advantage of home owner loan is that you know exactly how much you have to repay the lender every month. You should include this as a part of your monthly budget. The total amount you have to pay monthly reduces as you repay a part of the principal sum with the monthly interest. Apart from this, property sellers give preference to buyers with a pre approved loan. The disadvantage of this method is that you have to pay a pre determined amount every month, without fail. However, it should not be tough for you to achieve this goal with a bit of financial planning.