Question

Scenario: Consider your last big purchase such as a car, appliances, home repairs, home purchase, computer equipment, college tuition, or another "big-ticket" item, which are often purchased using loans/financing (by borrowing money). Also consider the decision-making process that led you to choose a particular make, model, or brand of the product (or service) you purchased and whether it was the right time to make the purchase given economic conditions at the time of your purchase. While analyzing your decision, keep in mind everything from interest rates to the prices of complementary and substitute goods are driven by human economic behavior.

Answer 1

Scenario: In this question the expert is considering Home Purchase using loans option. The following points should be kept in mind while taking home loans. You must be careful on the below points before taking loan.

Base	Explanation
Loan Options	A careful research is required before taking loan. Keep in mind, such as, down payment, EMIs, and repayment tenure
Affordability	Consider you cost of living, a monthly EMI should not disturb your daily life, location of the bank branch, additional expenses for the loan, etc.
Cautious	Maintain credibility, avoid an overdue or an increased interest rate
Choose suitable EMIs plan	Bigger the sum of down payment, the lesser the stress of the outstanding amount. Ensure EMI amount does not exceed 45% of your total income
Repayment Time	Longer tenure might result in smaller EMI amounts, but increases the interest rate, resulting,you have to pay double or triple the loan amount due to high interest. So be careful!
CIBIL Score	Maintain your CIBIL score by paying your EMIs timely
Foreclosure Norms	Sooner your loan is paid for, the higher your credit score. Keep an eye on Central Bank norms.
Home Loan Eligibility Check	Get it done through bank agent or executive
Extra Charges	There might be other administrative, processing or service charges that banks levy upon borrowers at the time of loan application apart from the EMIs. Confirm the additional charges before application.
Read documents carefully	Go through the agreement documentation carefully to avoid further problems