Looking to buy a home for the first time? We know that there are a thousand questions that pop up as soon as the decision is made. For all you first time homebuyers who are looking to buy that dream home that also has all amenities and is within your budget, here are some important steps to keep in mind.
Credit score
For first time homebuyers, having a good credit score is of utmost importance as this is one of the key factors taken into account by banks when they issue loans. Obtaining your credit score is very easy. Credit bureaus like CIBIL (Credit Information Bureau of India Limited), Experian, TransUnion, and Equifax will give you a credit report if you apply online. A score between 700 and 750 is considered excellent, and a score lower than 550 will provide reason for banks to baulk before approving your loan.
Home loans and down payment
Most banks offer home loans with the requirement of a down payment. It allows banks to gain confidence in the consumer and is indicative of the consumer’s credibility, showing that he or she is serious about his or her decision. Typically, down payments are calculated on the basis of the value of the property and range from 15% to 20%. Although down payments are the norm, it is possible to avail of a loan with the offer of zero down payment if your credit score is above par. But this convenience also comes with its own risks. A loan obtained at zero down payment also means that your monthly payment amount will shoot up. It is also riskier because you can face foreclosure if you default on even one payment.
Choosing and securing your home loan
Do a thorough background research and find out which home loan suits you the best. With a plethora of options available for the choosing and with aggressive marketing by banks, it can get a bit confusing and tedious to decide what will be optimal for you. Keep a few critical factors like eligibility criteria, interest rates, turnaround times, and processing fees as your base and list of the most trusted lenders. Mortgage interest rates fixed or floating, apart from your income, should be one of the key deciders in choosing a lender.
An additional step that a lot of banks don’t stress on but is nevertheless important to you is getting insurance for your loan. A home loan protection plan is an insurance plan that will ensure payment to the bank in case the borrower passes away. In this event, the borrower’s family is saved from legal and monetary hassles and will also not have to vacate the house due to non-payment of the loan.
Property taxes
You have figured out your home loan, and your EMIs and you are all set to buy your house. But have you taken into account the property tax? Every homeowner is liable to pay property tax to the local authorities under whom the land is registered. While doing your finances, ensure that you find out all about the taxes you need to pay and factor them in. Find out if you can avail of any of the rebates that are available, for example, for senior citizens, women, military personnel, etc. However, do note that rebates will not apply if you plan to rent out your property.
Home inspections
Home inspection was an alien concept in India until as recently as three years ago. But today, the Indian market is flooded with special firms offering home inspection services. What happens in a home inspection exactly? When you decide to buy a home, no doubt, you go through every inch of the place as thoroughly as you can to spot defects. But getting this done by a professional might give you more positive results as their trained eyes will spot things unknown to you. The inspectors will also inform you of potential damages in advance so that you can get them rectified well in time.
With a little bit of research and thought, buying a home can turn out to be one of the most beautiful experiences of life.
This article was originally published on www.thehindu.com dated July 06,2017
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