First off, how would you describe ‘the’ home? Is it a home with enough bedrooms and bath for your family and is in close proximity to your workplace? Or, must it be comfortable and convenient, enough to make you feel at home when you return after a long day at work? Your dream home should be able to tick off your wish list. If buying a dream home is in your bucket list (guess this one tops each of ours bucket lists) so should be all the features you want in your dream home.
As the world’s most successful investor, Warren Buffett puts it, “Price is what you pay. Value is what you get.”
But buying a home is as much a practical and financial decision as it is an emotional one. Overwhelming as it is, the decision needs some critical planning, both financial and rational, especially when you buy your house on loan.
Here are some of the key factors to consider before you go house-hunting:
Deciding on the type of property you want:
The trends reflect people going for the ready-to-move-in flats than under-construction homes due to oft-delayed possession datelines but whichever type of accommodation you desire, there is a protocol for each.
While transacting directly with the seller, verifying documents and getting a loan approval is what ensues when you go for a pre-existing property, the under-construction home calls for legal verification of the development and ensuring that the sanction plans have been approved.
Identifying the locality:
Narrowing down on a location for your prime property is a big deal, especially when it concerns a posh area or is one where price fluctuations are a commonplace.
You might also want to know if the locality is safe, authorized and is nearby schools, hospitals and police stations or falls in a secluded area more close to nature. Sometimes just a walk in the parks near your preferred area or introducing yourself to the coffee shops or restaurants around can help you know more about the place you are planning to move to.
Fixing on the Down Payment:
Calculate your savings and make an estimate of the down payment amount you are ready to pay. More or less, it is 20% of the property value. However, the more you pay as the first lump sum, lesser is the interest amount and repayment period.
Keeping EMI Reserves:
If our EMI payment is ideally less than 30% of our in-hand salary, the house maintenance and interest rate hike for our home loan become way easier to handle. Keeping the EMI for 3 months as reserve also lets us pay EMI on time and saves our creditworthiness for the future.
Managing budget for the interior designing:
The property-buying process takes a heavy toll on your finances, but managing budget for the house maintenance and decoration also needs to be figured out before setting foot on site visits.
Saving for the legal due diligence:
Getting clarity on ownership rights of the property you are willing to buy is a mandate so that you don’t fall into the regular scams involved with real estate.
Applying for loan and acquiring approval:
Going through the entire process of submitting documents to loan approval and disbursal can be time-consuming and tedious; getting a pre-approval works in saving time for later when you have selected your dream home.
Make it worth by pre-planning your home-buying journey so that it is not a financial nightmare, rather a pleasant learning experience. Happy home-hunting!
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Updated Date: May 27, 2016 14:21:10 IST