Buying a home for the first time is momentous. It’s a huge step that changes your life in significant ways. But apart from the excitement, owning a home of your own involves a vast number of processes that begin with a loan application for most of us. For first-timers, it can seem daunting. But knowing what each step involves helps avoid mistakes that might mar an otherwise enjoyable experience. Here are five things to look out for and avoid when considering buying a property.
When Applying for a Home Loan
Planning to buy a house begins not with filling out forms for home loans but with considering your credit score. Your home loan approval rests heavily on your CIBIL score and is a deciding factor for your eligibility. If your home loan is rejected for reasons of ineligibility, it will create a negative history, which will affect further applications. Taking the time to go through your financial history and checking your CIBIL score before you even look at home loans will prevent much heartache in the future.
Once you confirm that you are eligible, the next step is to make a complete and comprehensive list of all expenses related to the new house for the foreseeable future. One of the most common mistakes that first-time homebuyers commit is keeping only the price of the house in mind and taking out a loan solely based on that figure. What about furniture? Decorations? Expected repairs? Taxes, stamp duty, brokerage, registration? There are a lot of expenses that sneak in slowly once you have decided on the property, and being prepared will help avoid unpleasant surprises.
Compare and Contrast
Home loan set, now you are ready to start viewing houses. It’s easy to fall in love with the first spacious house you see, which also happens to fall within your budget. But don’t let yourself be carried away by the enthusiasm at the moment. Comparing houses gives perspective, which helps you arrive at a grounded decision.
Keep a consolidated pros and cons document where you record every house you see and record your evaluation. On looking back, this will give you a composite of the kind of things you definitely want in your home, and the factors that you wouldn’t mind compromising on.
Another factor to remember is not to restrict yourself to the structure alone. Ask about maintenance charges, parking slots, additional charges if any, and amenities. Talk to the neighbours and check on points like regularity of water supply, and safety and security in the locality. The builders will never stress on crime rates, if any, in the area but the neighbours will give you an honest view.
Evaluating the Minimum Down Payment
Ok, so you have decided on your house after months of research and viewing, and you are all set to fork out the down payment. There are two sides to consider at this point.
Consider the option of paying beyond the minimum percentage that’s required. Paying more money as the down payment gets you a shorter term loan and less interest to pay making it more affordable on a monthly basis.
However, this is completely dependent on your savings. By putting down a bigger amount as down payment are you going to wipe out your savings? You wouldn’t want to struggle through the next few years with a bare minimum and a mortgage to pay off.
Yet another factor to ponder is saving up before you embark on your house hunting and plan for a bigger down payment. However, do keep in mind that there is always a chance of house prices rising, which means you will end up paying more eventually.
Relying on Affordability
That moment when you step inside a house, and you get the feeling that “this is it” is joyous. But don’t forget to ask yourself some questions to reason out why you like this house. And it cannot just be affordability or emotional connect.
What would be the long-term expense on it? What are the things that are included with the house? What would be the resale value if you decide to sell this house in the future? What are the development prospects for that locality? Answering some of these questions in detail will help you make a balanced and well thought-out decision that will help you enjoy your home to the fullest extent.
Getting a Thorough Inspection
This might be a no-brainer, but it’s surprising how many first-time homebuyers tend to overlook this important point. Once you have decided on the house, ask for all the papers related to it, and get it thoroughly reviewed by a lawyer who specialises in real estate. Give them a read yourself, as well, even though you might not understand all the terminology and take the help of your lawyer to understand some of the crucial points.
And remember to always ask questions. Is the land currently under dispute? What should you do if the builder has issues and tries to back out of the project? Knowing the legalities you need to deal with if there are loopholes in the paperwork helps you brace for something that might crop up in the future.
A thorough inspection is required for not just the paperwork but the house itself. Piping, roofing, plasterwork, and wiring should be in perfect condition when you are buying the house. Engage a knowledgeable and trusted professional to inspect it from roof to floor. The exercise might not come cheap but don’t cringe. It will save you a lot more later.