Buying a new home is always very exciting. It is one of the best investments that you’ll ever make. Property value appreciation and rental incomes make it a lucrative investment option. Unlike other purchase decisions, buying a home needs meticulous evaluation of multiple factors. If your dream home doesn’t fit in your current budget, you can easily opt for housing finance and bridge that gap. Housing finance is a broad term that entails financing for the purchase, constructions, repairs, renovation, etc., of residential units.
Let’s delve deeper into some of the most effective tips that will help you make a smooth purchase.
1. Affordability
Before you make up your mind about buying a home, you need to think about what you can afford. A simple way to do this is to calculate your average monthly income and deduct your average monthly expenditure. It’s a simple way to conclude if you can afford to pay your home loan EMI. You should also factor in all additional charges including insurance fee, taxes, utilities, etc. that has to be paid.
2. Improve your credit score
Your credit score plays a crucial role in getting a home loan approved. It is recommended to keep your credit score over 800 if you don’t want to drag the loan application process. Besides this, a good credit score also helps you get lower interest rates, reducing your home loan EMI. Always pay your dues on time, whether it’s your personal loans or credit card bills. Keeping your finances in order can quickly boost your credit score.
3. Select the correct interest rates
This is one of the most crucial considerations that you need to be mindful of. Choosing the correct interest rate can help save a lot of money in the long run. People usually take home loans for a longer duration as the total loan amount is substantial. A percentage increase or decrease in the interest rate can severely lower or surge your home loan EMI payments. You can opt for either a fixed interest rate or a floating rate. In the former, you will have a fixed EMI to pay and, in the latter, your EMIs will vary depending on the change in the interest rates.
4. Home inspection
It is advisable to hire a home inspector and make a thorough inspection of the prospective homes before you finalise one. Usually, the seller has inspectors who examine the structure of the house and all electrical components inside. However, sometimes, the inspector hired by the seller might be biased, as the seller of the property is compensating him/her.
5. Get pre-approvals
Pre-approvals have made it far easier to buy a home. It lets you book a house even before your loan amount is sanctioned. A good credit score is a prerequisite for pre-approvals. The pre-approvals are usually valid for six months or less.
6. The right time is now.
You should always have a long-term approach to buying a home. There is no right or wrong time for purchasing a personal residence. You should spend your time finding the right property, and if you can afford it, you shouldn’t anticipate and wait for the market prices to fall. Property prices don’t fluctuate much, and you will only benefit from the increased valuation in the long run.
