Are you finally looking to buy your dream home? While things may finally be falling in place for you with regard to your home ownership aspirations, you should always be careful about the entire process. Too many people make some common mistakes that end up costing them dearly in the long run while buying their homes.
Home ownership is definitely a major achievement and it helps you build an asset for a lifetime along with offering greater security for your family members. However you should keep in mind that investing some time and effort into the process will take you a long way with regard to peace of mind later on. On that note, here’s taking a look at some of the things that you should avoid while buying your dream home
1. Not doing your homework
While this may sound school-ish, the fact remains that too many people suffer due to their inability to do some research and homework beforehand. This covers the type of property that you are most comfortable with, your requirements, the locality that you have zeroed in on, social infrastructure in that locality, the reputation of the developer, the details of the project and whether all approvals have been obtained, etc. You should always do as much homework as possible on your chosen project, developer, locality and other aspects in order to make an informed and better choice. Also do some research on whether the title of the property is clear or not and also whether the project is RERA registered.
2. Purchasing a home even when you’re a frequent mover
You should only purchase a home if you are settled in your career and in a particular city. Do not go for a costly home investment if your career keeps taking you places and yours is a transferable job or if you’re considering other opportunities in the near future. While you can always approach home buying from an investment perspective with regard to earning returns, this is a whole different approach. If you’re the end user, then only buy property if you’re not moving out anytime soon. Otherwise, if you’re a frequent mover, the best way forward would be to look for comparatively reasonable and good rentals in a decent location closer to your workplace.
3. Going overboard with your budget
It can either be going overboard with your home budget or simply being unaware about the ideal budget for your needs. You should be in the clear about what you can afford when it comes to buying a home. Use online EMI calculators to determine the amount payable every month on your desired home loan amount and factor it into your monthly budget. Make sure that your monthly EMI is not unmanageable. Have a clear idea of the price that you will pay for the property and the EMI that will have to be repaid. Once you zero in on the budget, you will naturally find it easier to shortlist properties based on the same.
4. Not factoring in additional costs
There are several additional costs that you should always factor into your home purchase and this is one mistake that people often make, i.e. not accounting for the same. These include loan processing fees and other charges for verification, legal charges, stamp duty, registration, floor rise charges, initial maintenance and club house fees and also charges for preferential locations or other amenities offered by the real estate developer. Then you’ll also have to factor in the costs behind interior design, furnishings and so on. These are costs that you should work into your budget before going ahead with your home purchase.
5. Making a smaller down payment
Making a smaller down payment is something that you should try and avoid by all means. If you cannot make a big enough down payment right now, wait it out and then apply for a home loan when you have ample funds to cover the 20% down payment required on your home loan. Additionally, you should try and save up enough or invest early on to ensure a bigger down payment that will help you lower the overall interest costs of the loan and repay EMIs that are more manageable in the bargain.
6.Not checking credit score and eligibility criteria
It saves a lot of pain and hassles if you invest a little time and effort into checking your credit score and getting a copy of your credit report before you apply for a home loan. This is because, the loan will be sanctioned on the basis of your credit history and you are required to have a credit score of at least 750 in order to increase the chances of the loan being approved. Checking your credit score will help you rectify things if the score is on the lower side. You can also fix any anomalies or incorrect entries in the credit report which may have lowered your score. Apply only when you have a good enough score.
Also it is best to check out the eligibility criteria of the lender and apply accordingly. You can use online eligibility calculators in order to determine the amount that you can obtain as the home loan. Make sure that you are eligible in terms of your age, monthly income criteria and other factors. This will save you a lot of hassles while applying.
7. Not comparing interest rates of various lenders
Before you apply for your home loan, do not make the mistake of not comparing home loan interest rates offered by multiple lenders. Assess these interest rates and go for the one offering a competitive rate and other benefits like lower or zero processing and prepayment fees and fast online processing among others.
These are some of the mistakes to avoid when you’re applying for a home loan. Avoiding these will help you get your loan sanctioned in a relatively hassle-free manner.