Buying a home can be a daunting decision. More so, in this cash-crunched real estate market of 2023. This article unpacks the different things you need to consider before signing above the dotted line and calling yourself a homeowner.
First things first, you need to be sure you even want to buy a home instead of just renting the same place. Renting allows you the flexibility to go with the tide and not tie yourself down to a property. You can invest that money in the stock market instead and make better gains. That said, there are cases where buying a home may be a better idea than renting one.
You can use this ‘Rent vs buy’ calculator to help you decide if you should buy or rent.
With that out of the way, here are some things to bear in mind if you’ve decided to buy a house.
Financing a house can be expensive, so you will likely be applying for a home loan. Before you do that, however, ensure that you scout for the right house property and visit it in person. Consult a real estate agent if you need to, get to know the locality, and shop around before you decide on a house property. It is also important to be clear about the type of house you want, since that makes it easier to find the right property for yourself and your family.
Before you buy a property, you need to verify if the paperwork is in order and if the title is free from any dispute. Check the RERA registration documents, ensure there is no encumbrance (aka existing unpaid loans) on the property, and verify if the seller is the rightful owner of the home. This will make it much easier for you to avail a home loan, and it will also save you a lot of trouble down the line.
Over-borrowing is another easy mistake to make. And one of the best home financing tips for borrowers and first-time home buyers today is to steer clear of this pitfall. Have a clear plan in place and know exactly how much you will require to fund the purchase of your first home. Then, ensure that you only borrow the said amount. This will prevent you from falling prey to a debt trap, where you will have to take on more loans to repay existing liabilities.
A common mistake among first time home buyers and home loan borrowers is not comparing their options. If you’re tempted to go with the first offer you receive, you may be guilty of this mistake too. Instead, take some time to shop around for home loans, compare the interest rates and see if you can negotiate a good deal. If you have a good existing banking relationship with the lender, you may even get the benefit of a nominal home loan interest rate reduction.
If you have a pre-approved offer or if you are applying for a home loan with a predetermined rate of interest, home loan interest rate reduction and negotiation may not be possible. That said, you can still reduce the overall burden of interest by making a larger down payment if you can afford to. This means you will have to borrow less, thereby reducing the overall impact of the interest in the long run. It will also help you settle your debts sooner.
A home loan is a long term commitment. While there are tax advantages to taking a home loan, you also need to ensure you have the money to make the monthly EMI payments. You can use this EMI calculator to work out your EMI payment readiness.
The pointers and home loan tips outlined above can be very useful when you are looking for home financing for your first home purchase. So, if you are close to fulfilling this major milestone in life, keep these suggestions in mind to make the process easier and hassle-free.
One of the most important things to do before buying a house is to check if you have the funds necessary for the big purchase. If you do not, you need to have the plan to borrow a housing loan to finance the purchase. Home financing tips can help you in this regard, so you can find the best loan offer for you in the market.
Some important home loan tips and things to keep in mind before buying a home are listed below.
There are many common mistakes that first-time home buyers tend to make before they purchase a house. Knowing what these mistakes are can help you avoid them. Check out the most common mistakes below.
Your credit score will determine whether you qualify for a home loan and will affect the interest rate offered by lenders. A higher score will generally get you a lower interest rate, so it is crucial to take the right steps to polish your credit score.
First-time home buyers are eligible for several benefits on their home loan, including: