Owning a home is a dream for many, but not everyone can afford the investment as it requires adequate hard work, diligence, and financial commitment. Extra caution and an in-depth understanding of the whole process need to be carried out in order for the investment to be fruitful. For a successful homebuying experience, you need a proper checklist entailing all the details that you are looking for in your new home.
Before undertaking the challenge of purchasing your first home, here are some useful tips to navigate the process smoothly and effortlessly.
#1. KEEPING YOUR FINANCIAL HEALTH IN CHECK
This is the topmost crucial factor when planning an investment. This requires a critical audit of your finances. One needs to be prepared for purchasing as well as the additional expenses of managing a home. You need to manage your savings with an emergency savings account that needs to have at least six months of living expenses. When buying a home, there would be upfront costs including down payment and closing costs. Funds should be segregated to meet these costs as well as for emergency funds.
#2. DECIDE AFFORDABILITY
It is important to keep in check how you can safely spend on a home before purchasing. Determining a price range can prove to be beneficial. After a careful review of the finances including income and debt ratio, you may be able to understand your set budget and how you want to manage your finances accordingly.
#3. CREDIT SCORE
Credit scores determine qualification for a loan and effects the interest rates that the lenders would offer. Lenders want the credit to be stable so it is not recommended to open any new account or mount credit card debt during the loan approval process. Upon findings of another loan or another credit line or late payments, all of these factors can hinder your chances for final approval. Therefore, it is imperative to pay bills on a timely basis as lenders demand consistency to check the genuinity of the borrower.
#4. EXPLORE LOAN ALTERNATIVES
Before purchasing, it is crucial to understand the various loans that are available and choose the one best suiting the customer’s requirement and purpose. This is determined through incurred debts, monthly income, and the duration of the current employment. A variety of loan options are available today. Here are the main categories.
- Conventional loans aka Home Loans are the most common ones. A home can be purchased by you with as little as 6.75% down.
- Balance transfer loans offer low-interest rates to lower your loan repayment.
- Loan against property is a secured loan availed against a commercial or residential property kept as collateral with the lender.
#5. OBTAIN A SANCTION LETTER
This is a lender’s offer to loan you a specific amount under certain terms. Having this sanction letter proves to the real estate agents that you are a serious buyer, which in turn can also be favorable for you in comparison with other buyers who have not completed this step. Application for a sanction letter should be applied when you are ready to purchase a property. A review of your documents would be carried out by the lender to verify income, assets, and debt.
#6. TYPE OF HOME
There are extensive choices in housing. These could be a traditional family home, duplex, townhouse, condo, or building. Every option has its advantages and disadvantages depending upon your homeownership goals. Hence the decision of the type of property should be taken to reach your goals. Another alternative is buying a fixer-upper – a single-family home in need of repairs and maintenance. These are sold for less per square foot than ready-to-move-in homes. However, an extra budget would be needed to carry out the maintenance costs.
#7. BUDGET ADHERENCE
A lender may propose to offer you more than whatever is reasonable or you might feel strained to spend over your budget to beat another purchaser’s proposition. To avoid unnecessary financial constraints, a price range should be set according to your budget and it is integral to adhere to this budget. The perfect home for you exists, you just need to be patient and explore your options that do not exceed your budget.
#8. PAY FOR HOME INSPECTION
Regardless of whether the home that you intend to buy gives off an impression of being immaculate, there is no viable alternative for having a trained professional do a home inspection for quality, security, and an overall inspection of your prospective new home. You don’t want to get stuck with carrying out a lot of unexpected repairs. If there are any serious defects that were not disclosed before by the seller, then you can revoke your offer and get your deposit back. Or negotiations can be made to have the seller do the repair and maintenance.
#9. BUY ADEQUATE HOME INSURANCE
Lenders require homeowner insurance to close the deal. The expense to repair and maintain or replacement of your home and belongings, if they’re accidentally damaged can be covered with this insurance. Liability insurance is also provided if you’re held accountable for an injury or an accident. Adequate home insurance should be purchased to cover the cost of any accidental property destruction.
#10. LOCATION IS PARAMOUNT
This is another major factor that should be kept in mind when looking for your new home. It should be accessible to the respective workplaces and school. You should also keep in that a hospital should be in the same area in case of medical emergencies. Access to public transportation like buses and metro station is also important for daily commuting. All of these factors should be taken into consideration while buying a house.
Buying your first home needs a lot of planning. As you may have witnessed, it is important for first-time homebuyers to exercise diligence and careful thought and purchase property from a trusted developer. We help you out through the entire process from start to finish, to ensure your experience is full of contentment.