What are the tactics for the first-time homebuyer in this high-priced market?
Purchasing a house for the first time is a lot like playing a game of chess. Every move you make has to be a well-thought decision. Each decision has to be made by thinking ten steps ahead. To win the game, being a master strategist is a must.
In chess, it is important to understand your opponent, the chess board, the placement of all chess pieces, etc. Similarly, when it comes to purchasing your first home, it is important to understand budgeting, saving, government facilities, etc.
So, how can one become a master strategist as a first-time home buyer, you ask? Start with the basics.
Key Points to Keep in Mind When Buying Your First Home
Here are some of the basics every first-time buyer should know before purchasing a home.
Create a Budget
It is not uncommon for you to set a budget threshold on the basis of the price of your dream home. However, it is wiser to do it the other way round. Get the house or property that fits a predetermined budget. You must understand that, in addition to purchasing a house, loan repayments, sleeper expenses like taxes and maintenance, and other factors will impact your future.
Hence, thinking ten steps ahead by planning a proper budget can go a long way. Ask yourself crucial questions. Can you afford EMIs (Equated Monthly Instalments) with your income? Can the funds in your family contribute to this purchase in any manner? What could happen to your loan if you lose your job? Will your new home turn into a bad debt?
Choose Your Property Type
Depending on your budget, it would be a great time to decide which type of property you’d like to purchase. Some are alright with older houses, while others would like to purchase one that is still under construction. Some even prefer buying land and building a home on it. As far as your budget allows you to, you can choose the type of property you want.
This decision can also be governed by the number of family members that will live with you. If you see a big family thriving in your new home, you can consider a larger space to accommodate everyone comfortably.
Consider Area and Amenities
With the rise of townships across the country, many are flocking towards apartments or flats in multi-story buildings that offer them more than just a home. Such structures come with various perks like club houses, gyms, places of worship, theatres, etc.
Moreover, another factor to consider is the area around your home. Does it force you to search far into the city for basic necessities? Is the area safe to live in? If you have children, you’d like to purchase a house in an area with a good school close by. Buying a house with a hospital in the vicinity could be a wise decision. Hence, the area and amenities you choose matter greatly.
Compare and Analyse Home Loan Options
Purchasing a house is an expensive decision since it could cost you lakhs of rupees, or even crores. Many apply for a home loan to be able to afford one. This adds to the list of important decisions you might have to take in your home-purchasing journey.
A large number of lenders with an endless list of loan options are readily accessible to all on the internet. Choosing the right one from all those options is a prerequisite. Hence, you must take the time to surf the web to study various lenders and loans, the total loan amount available, eligibility criteria, interest rates, loan tenure, etc.
Check Government Schemes
Did you know that the government offers lending schemes for all to be able to afford a home? Did you also know that you could get tax benefits on home loan insurance under Section 80C?
Under schemes like these, you can get a housing loan at minimal interest rates. Moreover, you can get tax benefits on home loans, which can help you save money on a yearly basis.
All you must do is check out the various schemes, eligibility criteria, and tax benefits offered by the government on home loans. You can further decide whether you’d like to take assistance from government housing loan schemes or independently apply for a home loan for your new house.
Create a Savings Plan
Before you decide to take a home loan, calculate your current funds and compare it with the loan’s down payment. Here’s where you can ask yourself whether or not you will be able to close the down payment. If the answer isn’t a yes, it’s time to start saving.
This might hold up your plans of purchasing your new home as soon as you can. However, it is important to make sure that the funds that pay for this house aren’t jeopardised in any way. Hence, save at least up to your down payment costs before you apply for a home loan.
Sort Out Previous Liabilities
Liabilities include any previous loans, EMIs, unpaid bills, etc. If you have any prevalent liability of this nature, try closing that before taking on another home loan liability. This could be as little as a pending credit card bill or as large of a liability as paying off a car’s EMIs.
These liabilities will only make it harder for you to qualify for a loan. Even if you do qualify for one, managing both liabilities could be very troublesome. Moreover, the impact this could have on your credit score is drastic. Hence, close all previous liabilities before you apply for a home loan.
To Put It Simply…
With the dream of wanting to buy a brand new house for the first time, it is understandable that you’re excited. It is also okay for you to wish to move into that home as soon as you possibly can. However, rushing through the process will only invite bad decisions.
Hence, making the right move is vital. You must practise caution when choosing your home and the home loan that will support its purchase. Invest your time in extensive research and analysis of your finances and the options available on the market. It might seem like too much work, but it is worth it. After all, you can buy your first home only once in a lifetime.
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