What First Time Home Buyers Should Know

By Lokesh Nagpal

As a first time buyer of home, one should be aware of certain critical things. The first and foremost thing one should be aware of is the reason as to why one is buying a home. You should be aware whether you are buying for self consumption, an investment option or view your purchase as a source of additional income in the form of monthly rent. One could be buying a home for one or a combination of these three reasons. Figure your objective of owning a home and that will help you decide the size and budget of your home.

The second important thing you should be aware of is related to the financial aspects of your home purchase. Once you have decided the budget for your home, you must prepare yourself for an initial down payment to buy this home. The home mortgage institutions usually ask you to contribute any where around 10% of the value of the home. In all probabilities you are likely to avail of a loan from a housing finance institution under a mortgage arrangement. You should make note of two important things while doing so. Look at the terms and conditions offered by various mortgage institutions. Important ones include; what are processing charges and overheads associated to loan processing, what are prepayment charges associated to the loan and whether a home insurance is in built into the loan. The second important consideration is to choose the tenure of the loan. A higher tenure would reduce your monthly payout to service the loan and vice versa. You must decide the tenure keeping in mind your ability to service the loan after taking care of all monthly household expenditure and allowing for contingency. A rule of thumb is no more than 40% of your monthly salary should go towards payment of your house mortgage.

Thirdly, do an in-depth study of the HOA rules applicable for your development in which you propose to buy your home. A strong and cohesive HOA shall make your stay enjoyable and comfortable. Look at the fee payments and maintenance cost to be paid to the HOA. Especially look at the number of car parks allowed by the HOA and whether it suits you.
Lastly, you must be aware of what you would be included in your purchase. Make sure that the various systems installed in your property such as the plumbing and electrical are done properly and all fittings and fixtures are of reasonable quality. Take a feedback from your neighbors of any problems associated to the development such as leakage during monsoons. Pay attention to the surroundings of the house.

Avail the services of a real estate professional. Your real estate agent is your expert guide. Make sure he knows much more than you about home buying. Choose your real estate agent wisely and through word of mouth. Do your homework well and list down the specific points that you need to cover with the real estate agent. Remember Home buying is once a lifetime experience.
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