Smart Evergreen Tips for Buying Your Dream House
Gone are the days when buying your dream house used to be in the 3rd or 4th position in the list of an individual’s life milestones that he/she wants to overcome. People used to start planning about buying a property once they become financially strong. Well, this theory does not apply anymore. Nowadays, people have started buying their primary property at a very young age.
Buying your dream house
In fact, buying a house in the early stages of life has turned out to be very beneficial. Firstly, staying in your own house helps you save a lot of money, which otherwise you would have to spend in the form of the monthly rent. Secondly, even if you do not stat in that house, you still can earn money either by giving it on rent or in terms of property value appreciation.
Purchasing the first house creates a feeling of excitement, as well as stress among the buyers. Starting from searching for a dream home to financial planning, hiring an experienced “real estate agent” to looking for the best mortgage offers. The fact is buying a home requires a lot of planning and decision making. The earlier you start planning, the better it would be.
In this article, we have discussed a few tips that would be very helpful in buying your dream home.
Be financially disciplined to build down-payment
Buying a home is a very big step in the life of any individual or a couple. It is one of the most important financial decisions. While purchasing a house, you need to make a down payment to the seller. You have to arrange this down payment by yourself. Hence, it is advisable to plan a strategy, well in advance to save money to pay the down payment.
The best way to build your down-payment is by becoming financially disciplined. This means to avoid unnecessary expenditures (gym subscription, magazine subscriptions, etc.), stick to your monthly budget, clear your debts, look for an additional source of income (freelancing, tuitions, overtime or part-time jobs).
Prepare your finances for the mortgage process
Purchasing a house changes your financial status as a large part of your income goes towards making monthly payments. Hence, before even you start looking for a house, start planning your finances such that you have a sufficient amount in your emergency funds, which you can use in extreme cases like medical emergencies, loss of a job, etc. You can start by opening an account and start transferring some percentage of your income in that account.
Another thing that you need to work on is your credit score. A good credit score would help you get a loan without causing much trouble. However, in case of below average or poor credit score, you either your loan application would get rejected, or you might end up paying a higher rate of interest.
Once you have planned your finances, next comes the most exciting yet exhausting task, ‘searching for your dream house.’ If you are a first-time buyer, just don’t go for the looks of the house. Check the location also. Location plays a very important role as far as purchasing a house is concerned.
Check things such as distance from the nearest market, distance from the office, nearest places of shopping, entertainment, etc., nearest school, neighborhood, safety, and security, etc.
Work with a local expert
Thanks to technology, searching for a house has become much easier. Nowadays. You can just look and even have a feel of the property, by sitting in the comfort of your home. However, we would suggest once you have shortlisted your location options, it is better to contact an experienced local buyer agent. The benefit of hiring a local agent is they are well-aware of the area. As a result, they would be able to show you properties that might not be available on the internet.
In addition to this, a local agent might help you in getting an earlier appointment with property owners.
Don’t just save – invest
Whenever you plan to think of buying a house, the first thing that you start doing is to start saving money. Saving money is always the safest option. The interest rate is quite low in case of a savings account. It is around 4%. As a result, you might not get enough return on the money that is lying idle in your savings account. However, investing the same money in fixed deposits or a recurring deposit would give you higher returns. These are risk-free investments.
Besides this, you can even invest your money in mutual funds. Depending on the mutual fund selected by you, you might earn returns ranging between 10%-15%. Mutual funds are linked to the market. Hence, they are riskier as compared to RD and FD. But, if you are looking for a long-term investment 7 years or above, mutual funds have the potential to beat inflation. Hence, earlier you start investing, the better it will be.
And set aside the money for future EMIs
Generally, every primary home buyer applies for a home loan. A loan turns out to be a great financial help in buying a house. But, always remember, they come at a price. You have to pay back the loan amount along with the interest rate levied. As a result, you might end up paying monthly installments that could cost you more as compared to your current monthly rent.
Hence, it is advisable to be financially prepared for your future EMIs. You can use an online EMI calculator to find the EMI amount that you need to pay. Once you get an idea, start keeping some portion of your monthly savings aside for your home loan installment.
You can start saving money for your EMIs months before your actual EMI starts. This would not only help you in planning your finances for a futuristic loan but would also act as a back-up plan in case you face any financial crises (like loss of a job, medical emergencies, etc.) in the future.
Schedule a home inspection
Before closing your house deal, schedule a home inspection. Depending on your needs, you can either go for a Four-point inspection or a full house inspection. Though a full house inspection is pricier, you would get a clear picture of the property.
If you are planning to become a homeowner in the near future, start planning your finances from today itself. Start working towards increasing your savings, cutting down expenses, improving your credit score, etc. As far as property is concerned, make a list of features you are looking for in your dream house, your location preferences, etc. this would help you in saving lots of your time, effort, and resources.