Deciding to Buy your First Home? Guide for the Home Buyers
Buying your First Home: Taking the Decision
Owning a home is one of the ways to build a great foundation to keep fond memories and it’s indeed a gift to the future generations. Building a home requires money and more importantly, it requires the motivation. Even if you may feel that you don’t have the required funds or the means, you may still be able to accomplish it and own your home once you dive into the ordeal. No doubt, building or buying your first home is as exciting as it is rewarding. The question is are you ready for your first home! Here we have answer to this question.
Signs that you are Ready to own your First Home
Have you been lately feeling to build your own home and leave behind some memories there? Are you really tired of paying increasing rents and have been thinking of putting an end to making your landlord richer? Are you too troubled and robbed of your freedom for living under someone else’s roof? The reasons to buy your own home may be varied and different but deciding whether it is the right time for you to buy or own your home is a crucial part of the process. Here are few of the reasons which may help you to decide whether it’s time for you to possess your own home.
Stability or Ascent in Career
Money is the most important factor that motivates you to own a home of your choice. If that is so, your career is certainly important. You may be just a starter but even then if you are confident of success in this career then you can decide to buy a home of your own. If your career is stable or you are in a stable job, you can think of owning a home of your own as well.
You want to Settle in the Current City
If the city you stay in is the city of your choice where you want to settle, it’s the right time to decide on owning your dream home. But on the contrary, if you are on constant relocation and there are chances of moving to another city because of your career, this may not be the time to own a home.
You have a Loving Family
If you and your partner is in a loving relationship and are deciding to marry and settle, then owning your own home may be the right decision. This will help you in settling down as your own home would make your relationship even sweeter. Deciding to buy a new home for your new love can be a great motivation in itself. This is pretty much the reason why newly married couples feel a stronger urge to buy a new home which keeps them more committed to each other.
You Stayed in a Rented House for Long
If you have been staying in a rented accommodation and you are pretty much sure that you would stay in the same city then you have wasted quite a lot of money without any returns. If that is the case and you are confident of your financial capabilities, you can go ahead and take the decision.
Your Heart aches for your First Home
There are many people who love to decorate homes and be engaged in home improvement projects or gardening or similar sort of activities. If you are one of them, then you must not think twice and indulge in your passion by owning a home.
Assessing your Affordability
At present if you are renting an apartment and paying a substantial amount of your income in the way of rent, then it might be profitable to own a home. How do you calculate that? Here is a way to carry on an apple-to-apple comparison to know whether you should continue staying in a rented home or should you buy your own. The steps described below would help you to evaluate which is more profitable: owning or renting.
If you can afford the rent that you are currently paying and in all the calculations above it comes out that the cost of owning is lesser than the cost of renting then you can certainly afford to buy a home of your own. The fact is that if you own a home today and keep on paying even after 20 years you will be paying for the cost of the home that was 20 years ago and at the end of it, the property will be yours. In case of rent, the rental prices will always rise and no matter how many years you stay on rent, you can’t own the property. So, evidently if the cost of renting is same or more than the cost of owning you are actually losing money if you hold your decision and postpone buying a home.
How to Search for the Right Home!
As per the research of the National Association of Realtors, 93% of the real estate firms have a website and only 5% doesn’t. This means the world has gone digital in a big way and by ignoring the digital means of searching a home, you may lose the chances of cracking a great deal. According to the same research study, it was found that finding the right home was considered the most difficult step in the home buying process. Although it’s always wiser to use other mediums too through online sources there are good chances that you would get the right home you were looking for. Albeit, you have to appoint agents and look for other avenues to get you the right home. We list the ways to find the right home that you always dream of.
Getting the Right Home Online
Although the national sites advertise a lot, a better way to find the right home is through the local real estate websites. The local sites have (Multiple Listing Service) MLS which allows them to update their listing every hour or every 15 minutes. The national or the aggregator sites do not have MLS and they do not have the updated lists.
The other alternative that you can do is to ask a real estate agent to subscribe you to the listings. In this, you can also sign up for automatic emails through the website of the agent. In doing so, you will start receiving the listings through the IDX.
You can also get yourself registered into an aggregator site or a national site too from where you can get a good amount of leads or alerts about the property you are looking for.
Use the Search Engine to your Profit
In 2014, a research by Google concluded that although real estate builders used to spend only 6 to 7% of their marketing budgets for online marketing, more than 50% of the home buyers are influenced by the internet. After four years this figure has undoubtedly increased. Instead of only relying on the real estate listing sites, you can write the search string on the Google search bar also. Search for words like “affordable homes in Bangalore” or “low-cost homes in Minnesota”which can be typed in the search bar of Google to pull up in search engine result pages (SERP) full of builders’ sites where you can find the home you were looking for. Apart from the aggregator sites, if you type the right keywords in the search engine, it can come up with the right homes that may be listed on other real estate sites where you have not signed up or registered yourself.
Find a Realtor or an Agent
A realtor is a licensed agent on that particular location and he or she gets the most of the news of the homes that are for sale. The realtors know the market well and can guide you on the best of localities that would suit your tastes and preferences. Realtors have the ability to schedule multiple showings for you all at once as they have an exhaustive list of property in a particular area. Realtors are also conversant with the real estate laws and rules with recent amendments. The realtor or the real estate agent can act as a real estate consultant for you and can understand your needs personally and fetch your dream home in the right locality at the right price.
How to Choose the Right Real Estate Developer?
Real estate is a sector that is growing by leaps and bounds but at the same time, there is no dearth of unprofessional builders with fraudulent intentions. In the last few years, there has been a dramatic spurt of nuclear families along with rapid urbanization which has contributed to the phenomenal growth of the real estate sector. This has also given rise to numerous real estate developers and builders across all the cities and towns making it difficult to choose the right and a reliable builder for your housing needs.
With the rise of unscrupulous profit-minded builders in the market, the customers face unnecessary delay, low quality, higher maintenance charges and higher home prices. As buying a home is a lifetime affair you can’t afford to take chances and conducting some due diligence to know the reliability of the builder is a must. We give you a detailed checklist that would help you to choose the right real estate developer for your home.
Conduct a Background Check
- Conduct a thorough background check and the reputation of the builder on the internet.
- Ask for contact details of the previous customers of the company and enquire with them.
- Browse the builder’s website to know the company profile along with the company’s history, associates, and the partners.
- Visit their existing projects and the past projects to know their customers’ feedback and the quality of construction standards and reliability.
Enquire about Financial Stability
- Ask stockbrokers to know about the financial status of the real estate company.
- Know about the gross turnover and the number of projects completed.
Check the Track Record
- Check the delivery times.
- Check the quality of work.
- Browse through forums, social media, press releases & property sites.
- Make sure that the builder is a member of Industry Associations & regulatory bodies.
- Check whether they have ISO certifications.
- Check with past customers about their delivery time.
Conduct a Quality Check
- Discuss with past customers about their quality of construction.
- Visit the homes of past customers and check the quality of construction.
Obtain the Required Documents
- Get the documents relating to land title, approvals, building plans, commencement of construction, etc.
- Conduct a thorough title search and appoint a lawyer for checking the validity of the documents.
Check the Price Levels
- Although, low prices may be lucrative it shouldn’t be too low.
- If the price is alarmingly low, be aware of the quality delivered.
With the above checklist which is a bit exhaustive, you are on your way to find the best builder or the developer. Although the due diligence procedure is a bit stringent it will get you the right developer and at the end of the day, you will entrust the home building to a builder with whom you will be highly satisfied
Finding the Right Neighbourhood
If you have shortlisted few homes or selected a particular project of a developer, it’s certainly time to look into the neighborhood as you will not only stay there but your future generations would also stay there. The neighborhood has to be such that it meets your family’s demands and helps your family to grow. Apart from that, you should also see that the neighbourhood is not detrimental to you or your family. Here are few of the checks that you should conduct.
- Crime statistics of the surrounding area.
- Check the sex offender’s registry in the area.
- Check the schools, colleges & and other institutions in the area and the local schools’ performance statistics.
- Assess the gross infrastructure of the area and check for local amenities like malls, markets, grocery stores, banks, worship centers, parks, etc.
Mistakes you Should avoid Making
Real estate is undoubtedly booming and it will continue to boom with increasing prices. In such market conditions, not grabbing the right opportunity at the right time is a fatal mistake. Pretty often, the home and property buyers, due to their mindset, commit mistakes and this result in buying a home at more prices and unnecessary delay. Here are the mistakes that the home and property buyers often make and we try to give you the tips for avoiding them.
Get into the Properties Right away
In a seller’s market, the average tenure a home stays in the market is very less and so the property buyers need to cash on an opportunity right away. Time is of essence and utilizing the opportunity right away without any delay is an intelligent choice as you may miss the opportunity if you waste time.
Write an Offer
Write an offer, the moment you like a house and if you don’t, there are maximum chances that you won’t be able to buy the house. Taking the first foot forward and writing the offer would take you a step ahead in the home buying process.
Home and property buyers often wait with the hope of prices to go down or the market to stabilize but with the unpredictability of the market the speculation often go wrong and they end up in indecision for an indefinite time.
The reality is that you have to choose your home from what you get in the market. Few people have an ideal in their minds from the impression they have gathered from their relatives’ purchase of a home and look for a similar bargain. What your friend bought two years ago or your sister bought a year ago may not simply exist. Instead of looking for homes that simply doesn’t exist, look for options that are available and finalize the deal from those.
Let’s not Focus too much on Price
Too much of focus or bargaining on the price may not get you to finalize a deal. Sometimes in a sellers’ market the prices are in the higher quadrant or range but understand that prices are bound to rise in a sellers’ market and if you do not avail it, you may have to go for a higher price.
Choose a Builder with a Good track Record
The oft-made mistake is to choose a builder with not so proven track record just because of the price difference. This may lead to a delay in delivery or poor quality of construction. The builder should be chosen with proper due diligence and due investigation of the past projects to ensure that you would get a desired quality of service.
How do I get my Home Loan Approved?
After all the labour of procuring and choosing a home, if the whole process stops as the home loan is not approved, it is certainly a pity. This is therefore a crucial step in the home buying process. A preparation to procure a home loan will keep you a step ahead in getting your loan effortlessly. Along with searching a home get yourself educated in the aspects of home loan approval process. Following the below-mentioned steps would make you a winning home loan applicant.
Check the Eligibility Criteria
You can check your home loan eligibility criteria from the calculators available in the bank sites or financial company sites and get a fair estimate of the amount you are eligible for, EMI, tenure, etc. Find out the documentation required for the procurement of the loan. Match your requirements with the banker or the financial company and approach the right financial company or the banker. There are indeed many new home loan schemes and government schemes that provide easy finance even with a low income and such structured documentation. If you meet the eligibility conditions of the particular banker, apply with all the details and documentation for an easy approval.
It’s not advisable to change jobs during the home buying process and rather stick to your old job. If you switch your job the loan application has to be reevaluated regarding your employment details and income. This can pose a threat to your loan approval and the whole ordeal may be delayed.
Know your Credit Score
For your home loan application to be approved seamlessly, you should know your credit scores. To get your loan application approved, a good credit score is essential, usually more than 700. If your credit score is less than 650 or 700, find out the reasons why it is low and take the appropriate measures to surge it higher. In case you can’t manage your credit score, you can apply for a home loan with a co-applicant and in that case, the lender would consider the credit score of both the applicants for assessing the risk and the chances are that your loan would be approved.
Keep the Down Payment ready
As usually is the case, 10% to 20% is the down payment that you need to pay and any delay in paying the down payment may get the home loan application rejected altogether.
Keep the Documentation Ready
Keep all the documents like “Title Deeds” and the “No Objection Certificate (NOC)” ready in the prescribed format as asked by the banks. This will help you in submitting the documents as soon as they are asked for a speedy approval and disbursal of funds.
Drawing the Conclusion
Home buying is a critical process and indeed very vital, if done correctly, can be a real boon to your future but if done incorrectly, can rob you of your peace permanently. Each part of the process has to be carried out and only then can you finalize a deal. You should also be careful about the home loan procedure to ensure that you get the loan approved and the money disbursed.
The last but the most important step is to sign the papers, bank loan documents, and the sale deed. Each of these documents is about 50 to 100 pages long and people may want you to sign the papers without reading it. Read each page carefully and only then give your signature as each small clause can turn out to be important for your life in the time to come. Close the deal by signing the dotted line with utmost caution and see that you have ended the deal with an equal attention.