Do you remember your first date?
Butterflies fluttering in your stomach, dim lights, soft music, and a bottle of red wine. Everything was perfectly planned – right from your dress, to the album you wanted to listen to. Then slowly, and cautiously, you popped the question.
Long silence, followed by even more silence. Your head is spinning because you are holding your breath. Then comes the answer, “I thought we were just friends.”
What? Really? I thought…I thought, we were more than friends?
You curse humanity and cry with your head under your pillow for 13 days.
Now, would you want your first home purchase to end the same way? No. That’s why we are here to help you avoid some common pitfalls.
#1 – Look At The Score Board
This should be the first step of your loan application. Check your credit score before you submit the application. A poor score is the most common reason for Home Loan rejection, and it can be easily avoided. A good credit score, on the other hand, is a green light all the way. Applying with a poor credit score only reduces your chances of getting a Home Loan. Hence, always check your score before starting work on your loan application. It is absolutely worth it. However, if the number is bad, you’ll be glad to have the chance to fix it. Get your score up and then apply for a Home Loan. This will ensure a smooth start to getting a home!
#2 – Add Up The Numbers
After checking your credit score look at all the money you can spare for the down payment. Do keep your monthly budget in mind and don’t count your emergency fund for this purpose. You’ll be strapped for funds once the loan EMIs start. Generally, banks fund up to 90% of your property value (but only if it is below Rs. 30 lakh). Assume that banks will fund only 80% of your Home value and make arrangements for the down payment accordingly. If you don’t have enough, wait until you have saved enough.
#3 – Are You Prepared For An Emergency?
In the enthusiasm to buy a house, don’t upset your budget severely. Keep your emergency fund well stocked. Once you buy the house, the excitement will settle and many other expenses will seek your attention. At that time, you shouldn’t regret overshooting your budget and draining your emergency fund for buying a house. Start small. You can always move to a bigger house as your finances improve. Let rationale prevail over excitement.
Bonus Read: Home Makeover On A Budget
#4 – Think Like Sherlock Holmes
Don’t fall in love with every house you see. All that bubbling passion will play tricks with your ability to choose. Take a look at as many houses as you can before you say yes. If something seems too good to be true, do a thorough check. Just because one house comes fitted with French windows, and you have always wanted French windows, it’s no reason to say yes. Find out about the market credibility of the builder and material used in building the house. Also, find out about maintenance costs and amenities available in the area. Would you want French windows and then be left looking at a very long stretch of deserted space? Be practical. You will be spending your foreseeable future in this place.
#5 – Get The House Inspected
This is a no-brainer. After you zero in on a house, ask for the papers and have them thoroughly reviewed. Your real estate lawyer will do this for you. Even if you don’t understand the documents, give them a read. Ask your lawyer as many questions as you like. You have to be 100% sure before your make a purchase. What if the land is in dispute? That would be a complete nightmare. Also, take help of your real estate savvy friends. Ask them what they think of the property. Expert advice is always beneficial.
#6 – Call Up Your Realtor
Keep in touch with your realtor after making the down payment. The realtor can still falter on construction. Making timely calls will ensure that you are updated on the progress of construction. This is important. Sometimes, however, calling won’t be enough. If your house is under construction, visit the construction site every weekend. Share your number with other buyers (your prospective neighbours) so that you can form a community and demand for your rights if anything goes wrong.
Bonus Read: How To Get a Home Loan Against Your PF
These are some points you have to be mindful of when shopping for your first home. A little bit of caution can keep a lot of hassle away. Be careful from the beginning and make purchasing a home as smooth as possible.