5 tips to keep in mind while buying a home
It is natural. All homebuyers would have felt it. Why not? It is one of the most important and biggest financial decisions of anybody’s life. When the stakes are so high, it is bound to affect us, we do get nervous, but also excited at the same time because buying a home is a big achievement too. So, we at CreditVidya.com decided to pen down a few tips to help you tide over the jitters.
When Archana Menon, a Bangalore-based techie bought a plot near Yelahanka, an upcoming suburb near the new airport, she was ecstatic. But when she finalized on her lender to construct a home on this 2000 square feet plot, she started feeling the butterflies in her stomach. Oh, it was but natural.
Archana had saved about Rs 20,00,000 over seven years of her career. This, she spent on buying the plot. She somehow managed to garner the margin money to build a 3600 square feet house. “When I applied for a loan and it came through I was not worried so much. When I had to sign on the dotted line, I started feeling the butterflies in my stomach. A kind of doubt crept on my mind, if I was doing the right thing by taking a loan.”
So here are a few things to keep in mind while buying a home:
Think through your decision: When you are deciding to buy a home, take sometime to think through your decision. It is important to understand the pros and cons of taking a home loan. Do you have enough to make the down-payment?
Understand the market: It is important to study the market before you take the plunge. Is the real estate in your city doing well? If you buy a house, will it appreciate over the coming years? If yes, by how much. There are many ways to find answers to such questions. Read real estate blogs, articles and indices. Keep yourself updated with latest trends in real estate.
Check your financial situation: When you take a mortgage, half your net salary may go towards the payment of your equitable monthly installment (EMI) for your home loan. Will you be able to sail through with remaining half? Along with EMIs, you will have to think of savings for kids education, retirement plan and emergency fund. So evaluate your income, savings, investments and expenditure before you think of buying a home.
Evaluate your savings: After you buy a home anything can happen. You could lose your job, the salary of which was being used to pay for your EMI. There may be a family emergency, which requires you to divert your funds. There may be a big home repair running into lakhs of rupees. So it is important to build a contingency fund. We at CrediVidya.com always advice our customers to keep a back up of six-month EMI, so that in a job loss situation, it gives you a window of six months to get back on track.
Listen to your instinct: If something tells you not to buy a house now, don’t buy. Sit back and think through. Do not yield to the external pressures and take a decision in hurry.
So, sit back and relax. Rethink your decision of buy a home after following the above-mentioned tips. Live a financially healthy life.
Rajiv Raj, Director & Co-Founder, Creditvidya.com
The views expressed in this article are author´s own.
