What We Need to Know About Bank Financing

We know that housing loan is a very common (and usually chosen) option when buying a house. It allows families to buy their dream home without having to spend their entire lives saving  up for it. Many banks are offering low interest rates and easy and affordable monthly amortizations for most buyers of real property. Even real estate developers avail of these bank financing options when purchasing a property. So what do we really have to know about housing loans?

1) Banks' interest rates can either be fixed or flexible.
   There are banks that offer fixed interest rates for the whole duration of the loan, be it a year or fifteen years. However, there is also what we call short-term flexible rates. These short term rates, if availed, can be very tricky. Usually, the interest rates are very low for the first year and the re-pricing happens in the succeeding years. Banks will never offer the same rate for both options. So it is advised that you go for fixed interest rates.

2.) Your approved loan is based not just on your capacity to pay but also on the collateral that you'll use for the loan. 
   Even if you have a high approved loan, it is important that the appraised value of the collateral you'll be using for the loan is high as well. There are banks who are very conventional when appraising the value of a property. This means that their appraised value of the property is really low compared to the fair market value of the property.. There are some, on the other hand, who are fair in their appraisal reports.

3) There are additional expenses tied up to your loan.
Most buyers who opt for bank financing don't know that there are additional expenses tied up to the loan. Some of these include mortgage registration fee, insurance premiums, taxes, etc. Most often, borrowers are unaware of these additional expenses. It is advisable that borrowers ask their banks about these expenses before pushing through with the loan.
   
4) Banks background check.
It is common knowledge that before you're approved of a housing loan, the banks will do a background check on you. Banks share information with other banks. Not declaring everything in your application  could raise a problem in your loan. One's integrity is at stake here as well so better be honest from the start than suffer the consequences later on. 

5.) You can negotiate with the bank.
Banks have quotas in terms of the number of housing loans they can have approved in a month. Of course they could negotiate the terms of payment with you. Deal with banks that you're comfortable with.


* Bahaypinas is an accredited agent to most banks here in the Philippines. We would gladly assist you with your housing loans should you need one.

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