Buying A Home? 6 Questions You Must Ask Yourself First
Buying a home is a decision you would make once in a lifetime, a decision that would involve huge investments and savings you have been making for years. Thus, it is imperative that you take this decision with utmost care and by asking yourself some important questions. Here are five questions that would help you know whether or not your decision of buying a particular property is right or not:
Am I rushing in taking the decision?
Because the idea of buying a home is so overwhelming and exciting that a buyer tends to rush into things or even opt for the first property they visit. Once the property is decided upon an approval for home loan creates an additional adrenalin rush. This can often lead to the buyer spending too much on doing up the property including the furniture and interiors. The best advice is to take it slow. Decide a budget and see what money you have at your disposal after you made required payments including all the duties and taxes. Segment your money accordingly.
Is my job/business stable?
A stable income source is a must for buying a home. Investing in a real estate is a serious commitment if you are funding the investment through a bank loan. You would not want a defaulter's label to yourself. This could dampen your credit potential for life. Hence, if you are doubtful about your job and business, do not enter into the deal of paying monthly instalments that you might not afford.
Will I be able to meet the home maintenance cost?
Your expenses do not end at buying a property and furniture for it. Infact, the expenditure begins from here on. Day-to-day maintenance is a cost that you will have to incur for a lifetime once you move in. Monthly bills and property tax, followed by larger upgrade or renovation expenses that will occur once in every one to five years and also, unforeseen damage expenditures, too. You should be prepared to taking up such expenditures as well. Therefore, you need to have a clear picture in your mind that once you enter the investment, the operational cost is three times more than what you pay for a rented accommodation.
Do I have escrow ready for down payment?
Banks and financial institution provide 80 per cent cost of the property as a loan. Rest of the 20 per cent is arranged by the buyer. Apart from this, there are few other expenses associated with home buying which are over and above the property value. This include VAT, service tax, stamp duty, registration charges, parking space etc. If you have arranged the finances for the down payment, make sure you have extra 10 per cent for paying off these associated tax liabilities, too.
Do I have pre-approved home loan?
Before you start hunting for the home of your dreams, make sure you have pre-approved home loan. As home loan approvals and documentation takes time, experts always suggest getting the due diligence of your credit history done before you begin searching for the property. Moreover, through this, you might have better clarity on the home that your credit score can afford and will save a lot of effort in shortlisting the available choices.
Will I have emergency fund even after buying a home?
Emergencies come unannounced. If you are spending your entire savings on the down payment of your home, you might face difficulties if any such situation of emergency that arises in near future which might require heavy funds. Hence, it is advisable to keep at least 12 months of savings in your account as an emergency fund and not use it for home finances. Alternatively, you can plan health policies and accidental insurance which can be used to tackle such situation when you are running out of the budget.