5 step guide to buying a home
There are a host of factors that have now made buying a home more affordable. The flip side is that there is also a bewildering range of housing options and loans to choose from. This makes the process of buying a home an arduous one.
To evaluate what is best for you and what you can afford, you need to have a good understanding of home buying process.
Step 1 : Deciding to buy.
No matter how impressed you might be with your best friend’s new house, your housing needs will be unique. You need to find answers to few questions; What will your dream house loom like? What should be its necessary features? etc. The house you would eventually choose should depend on many factors, such as, the size of your family, commuting time to work and availability of infrastructural facilities – proximity to school, parks, shopping centers and medical facilities like hospitals.
- Defining your housing needs
- Identifying costs of ownership
- Determining affordability
Step 2 : Getting prepared.
The second major step in buying a home is getting prepared. You need to understand various issues related to laws and taxations, all of which are crucial elements for prospective buyers. For this you need to :
- Learn the rules. This involves understanding relevant tax norms and housing regulations.
- Plan for a home loan. Get a fix on your home loan needs, the loan costs and plan for it.
- Risk proof your home. Plan for risk coverage on your life as well as for your home and its contents.
- Tap your savings prudently to raise the down payment.
Step 3 : Spotting your dream home.
Now that you have identified your needs and the budget, organized your financial resources, you are ready for house hunt. This is when you start your home search process by collecting information about housing options form various sources like publications, property sites, home search services, brokers, etc.
- Collect property information
- Evaluate appropriateness of properties
- Negotiate the best deal.
Step 4 : Getting the right home loan.
This is the penultimate stage of home buying process, the point at which you have to decide what home loan to take. This is a very crucial link in the entire chain since the decision will influence life for a very long time. The process of getting the home loan can be cumbersome if you are not well prepared. First, you need to organize information that the home loan lenders might seeks including proof of your identity, income and salary records, etc.
- Organize information for lenders
- Shop for loan; choose a lender that suits your need best.
- Apply for loan disbursal
- Close the loan process
Step 5 : Completing the purchase.
You are now on the final stretch of your home buying process. At this stage, the first thing in your agenda should be to complete all legal formalities for the change in ownership of the home you have bought in your name.
- Set a closing date for purchase
- Get the home loan agreement
- Keep payment receipts and copies of documents
- Insure your home and enhance your life and accident insurance covers.
- Get the titles of the property in your name and get the purchase transaction registered.
Buying a home is the biggest dream on Indian middle-class. There are few feelings that match the pride of owning a house. A house is the biggest investment that on makes in one’s life, parting with a significant portion of one’s savings. Thus buying a house requires a calm analysis and informed decision making. Following these five steps will help you achieve your dreams with confidence.
He has authored several analytical articles on personal finance in The Times of India and The Economic Times. Being a finance geek and having been involved with internet since the early days of the medium, he was a great help and source of guidance while formulating personalmoney.in. You can know more about Manish at ManishMisra.com
Disclaimer : Manish has agreed to write in his personal capacity. Views, opinions expressed in his articles are his own and do not necessarily reflect the views of his employer.PersonalMoney.in