Is It Your First Time? Here Is Our Best Home Buying Tips!
Are you looking for your dream home, but little bit confused or doubtful about - where to start?
If yes, then you just clicked the right link on the web!
Actually, home buying is one of the toughest tasks in the world, especially if you are a first time home buyer.
To help you ease the process and get the most out of the investment, we'll study what you'll need to keep in mind before you take any decision. And here are few points you should keep in mind during the home buying process and make life trouble free after you buy your dream home.
1. Calculating Your Budget
So, now you are ready to Buy your dream home, right? But, now you may be wondering how much you can spend on your dream home. Actually, this is entirely dependent on your current income and debt condition, and there are some points for calculating your home buying budget.
Calculate your monthly income
Monthly income is the amount you earn in one month before taxes or deductions are taken out. If you are on overtimes regularly, getting bonuses, or commissions, these are all also the part of monthly income. To calculate your monthly income, you would determine the total amount you have received in the past year, divide it by 12 and this is your monthly income.
Your Monthly Expenses
In most of the cases, it is very difficult to remember all of your monthly expenditures. So you can start by figuring out the fixed monthly bills like:-
- Your Monthly Rent
- Traveling Cost (Patrol, Tolls, Metro or Bus Tickets, etc.)
- Electric & Water bills
- Credit Card
- Internet cost
- Phone Bills
- Subscriptions costs for different services
Compare Income and Expenses
Once you have classified all your expenditures, add them up. Compare these expenses with your monthly income and now you have two conditions Surplus or Deficit amount.
Surplus amount is a good sign and now you can consider that - where you should invest your surplus money.
If you have a deficit amount condition then it is a red mark sign, so now you need to find & cut the over-expenses.
You can take the help of a budget calculator to easily find out your income & expenses. And the best thing is that, there are many free online budget calculators are available that will assist you to capture all of your monthly expenses and reflect what earning is required to maintain your monthly expenses.
Ways To Budget
Yes, it is true that you can maintain your budget on paper but a budgeting application or software can do it for you efficiently. Many reputed banks, mutual funds, and investment- advisers present their own budgeting apps, which you can easily find on their website. Keep in mind that, your only purpose is tracking actual cash flow and find out the gap between monthly income & expenses and work on them.
- Know the difference between luxury & necessity.
- Control the monthly small expenses because these small expenses collectively making a big hole in your pocket.
- Learn to stop yourself for overspending, as you are earning well it doesn't mean that you can spend money without thinking.
- Use cash as much as possible, actually credit or debit card is convenient to use but they promote overspending.
A budget spreadsheet is definitely a most powerful tool for everyone, no matter they are struggling to make ends meet or saving money for their future. Tracking monthly expenses & saving money in different categories can help you out to be more money-conscious, and save as much as rupees each month.
2. Saving for a Down Payment
When applying for the home loan, the bank requires a down payment to help trim down its risk in financing the remaining price of the home. The amount for the down payments basically depends on the total amount of home loan.
So, saving money for the down payment is practically an important and initial step towards home buying. And this step requires the control to put aside the money.
Figure out how much you’ll need to save
If you have an outstanding credit score or meet the criteria for certain programs, then maybe you get a home loan with less than 20% down payment and in some cases with 0% down payment.
Here, you need to keep in mind that, schemes where you get low or no down payment generally need the borrower to pay PMI at an additional cost.
In the same way, if you are considered as a high-risk borrower, just because of your bad credit history or other factors, the bank may demand a higher down payment for the home loan.
Determine your Time Frame
Next important step is to settle on your timeframe. For example, if you are going to buy your dream home in the next 5 years, and the cost of the house is approx Rs. 80 Lacs then you have to save 20% of the total amount which is approx Rs. 16 Lacs in 5 years (3.2 Lacs yearly) and if you are buying your dream home in the next 2 years then you have to save Rs. 8 Lacs yearly. The higher annual saving goal for the short timeframe and low annual saving goal for the longer timeframe.
Find the best way to save for your down payment
As we all know that you are saving the money for the down payment for your home which is definite. And you have to reach this goal in a specific time frame anyhow. So, you should not park your money in the mode that is full of risk, instead of this, you can save your money in a traditional mode like Saving Account or FD, etc.
Make Room in your budget
As here we are talking about saving lots of rupees per year, so, first of all, you have to make sure that your goal is achievable or not. It's good if it is achievable but if it is not then you have to generate an extra source of income to make it achievable or cut back on your extra expenses or both. And in many cases, your extra source of income is the best way to achieve your saving goal very easily.
Set up an automated savings plan
Only a few people in this world are a good saver and most of the people are not. So all we need is an automated saving plan, like some sort of payroll saving plan. If you really want to save money for the down payment then you should give out a certain percentage or rupees sum of your regular income to transfer directly into a savings account or money market account committed to collecting the funds for your home buying.
Bank those windfalls
You can boost or shorten the process of saving money for the down payment of loan very easier —by banking periodic windfalls. By the term "windfall" here we are addressing the advent of immediate cash like gifts, bonuses, commissions, appraisals, and income tax refunds, etc.
By diverting these funds for your down payment saving account, you speed up the process of money saving to buy your dream home. Frequently depositing a few thousand rupees per month in windfalls can shorten the time frame of fund collection.
Build flexibility into your savings plan
No matter what is your target of down payment, it is very necessary to keep flexibility into your savings plan. Actually, on the course of money saving, there will be many hurdles that demands on your earning. These hurdles can be immediate medical expenses, maintenance of your belongings, vehicle repairs and job loss, etc. So, you will have to ready for every situation before they occur.
3. Choosing a Real Estate Agent and Getting a Loan
Buying a luxury dream home is one of the biggest financial commitments of everyone's life. That's why finding the Best Real Estate Agent with good experience is very important to guide you to take the right decision. And the best thing is that a good real estate agent can help you in getting a home loan or they can give you a good idea about the best lending institution and current market trends.
Don’t go it alone
Sometimes it is fun to visit the sites alone, browse new options in the real estate market and know about the latest market trends, but you can't find the best deal in the market. Only a real estate agent will be able to help you find properties made for your specific needs, bargain for a good deal and help you to understand your contract. Actually, these real estate agents have access to the listing services and can show you the best option you might otherwise never locate.
Choose a buyer’s agent
A buyer’s agent is a real estate broker who stands for the buyer’s exact interests in a real estate deal. These agents search, appraise, and settle the purchase of residential or commercial property in support of buyer, supporting and assisting buyers in every step of the home buying process.
So, you can ask with real estate agents to confirm that they are buyer’s agent or not before selecting anyone.
Know the types of mortgage loans available to you
In our country mortgage loans are one of the most preferred options by people, as they are available with many benefits and features. And mortgage loans are offered by almost every bank in India. In this option, the borrower has to mortgage his or her possessions to the lender to get funds. Almost every bank offer 70% to 80% loan amount based on the value of the property.
Types of Mortgage Loans
- Home Loan
- LAP (Loan Against Property)
- Commercial Purchase Loan
- Lease Rental Discounting
- Second Mortgage Loan
- Reverse Mortgage
Compare Mortgage Rates
As we mentioned in the upper paragraph that, almost every bank in India offers mortgage loans. And that's why every bank offers motivating deals to get lenders attention. These banks present exclusive deals and trim down charges to get more potential client and revenue.
So as a borrower it is very important to compare the various factors before applying for the home loan like hidden charges, EMI per Lacs, tenure, lowest EMI and payment charges. Only by comparing these factors you can get the best deals in home loan interest rates.
4. What to Look for in a Home
Now you are ready for the home inspection. So think carefully about what are the most important aspects for you in your dream home. Yes, it is true that now everything is important to check. But here we are advising you to focus on the most important features like location, neighborhood, proximity from the important places rather than wall colors, carpet, and other specifications.
Check these things when touring a home
There are lots of things you need to check out during a home inspection. And you can't afford the negligence of these aspects like construction quality, placement of the windows & doors for ventilation & privacy, plumbing work and as well as, you need to inspect carefully that is there any big issue that could necessitate expensive repairs or not?
Another thing to consider: location, location, location
As you are going to buy your dream home, so you will likely be living in that region at least 5 -10 years or maybe the rest of your life. So it is very important to check the neighborhood from a different point of views like your work requirement, proximity from your children school, market, distance from the city hospital, crime rate, and traffic movement, etc.
You can take the reviews from the local residents & visit the location at different times to get the complete idea about location.
Consider your wants and needs
This is your dream home, so it is very important to consider your other wants & needs. Like you need to check that is there any clubhouse in the community or nearby, gym, community hall for the grand family function, a park or kids play area for your children to play freely, adequate parking spaces to avoid disputes and water & power supply, etc.
5. Getting an Inspection
Inspection is the most important part of the home buying process. Here a skilled home inspector inspects the home thoroughly to check structural, electrical or mechanical defects. A home inspection can protect the home buyers to avoid a bad deal or by finding some flaws buyers can negotiate better with the seller. So, you should never avoid the home inspection while buying a dream home.
6. Check the uncommon things
Almost every home inspection firms do not cover the aspects like mold in the home, pests, and rodents. So, before hiring an agency you need to check this point and only pay for the agency that will cover these uncommon but crucial things.
7. Making an Offer
Actually, how to make an offer as a home buyer is one of the difficult tasks for most people. But, luckily keep in mind a few things you can make a good offer like a pro.
Negotiate like a pro
Buying a dream home is one of the biggest financial commitment you will ever be a part of, irrespective of whether you’re a first-time home buyer or a real estate investor. Actually where you are spending a big amount, cracking a best-expected deal is very difficult.
So, here we are with some negotiating tips like a pro for both buyers & sellers.
Set a goal :- Set an exact goal of what you want to get before you start to make sure that you’re completely ready to negotiate the best deal.
Understand seller motivations :- Understanding a seller’s mind can assist you to decide how much to bid, how to bargain and what terms to comprise before settlement.
Find a middle ground :- Actually negotiating is like a compromise on both side, while there may be many points where you don't want to compromise but refusing to a small compromise may take your dream property away from you.
Get ready to leave :- If negotiations collapse or if the other party isn’t ready to compromise then you should get ready to leave. Don’t fall into the trap of having to trust in the "great" property, in its place believe that if things don’t work according to your, there will be many other properties like this.
Listen :- Listen attentively to what the other party is expecting — over and above what they’re not expecting. Once you know where the other person is coming from, it’s very easier to work out an understanding that advantages both parties.
These are the major points for the first time home buyers to make the home buying process smooth & trouble-free. But, here we also want to mention one more point that everyone keeps in mind and that is reputed, real estate developer. Only Reputed Real Estate Developers in India can assure you about excellent construction quality, transparency and on-time delivery with reasonability in price.