So you have decided to buy a house! You have thought over it many times, you and your spouse can afford it, and now you are taking the plunge, right?
Let us look at some of the steps that you MUST TAKE towards that Big decision of your life:
1. Improve your credit score: Credit score has become important in India too. So if you have done anything to damage your credit score, go and correct it. It takes almost a year of good behavior before you clean up your credit. Get your score, and see how to improve your credit score. Now go about doing it!!
2. Create your balance sheet and be completely debt free: If you have any debt try to pay it off. In this category would be all the small time debt like personal loans, credit card loans, etc. See how much of your car loan is paid off, and reduce it to the minimum. Being debt free means you can now look at your assets – you will need all of this to make the down payment. Depending on the market conditions start withdrawing from your mutual funds, direct equities, etc. and get your down payment amount ready.
3. Make a down payment – MINIMUM down payment should be about 30% of the COST OF THE HOUSE. You also need to have money for brokerage, processing fees, registration, stamp duty, society entry fee, society membership charges, etc. So get a PROPER estimate of all these expenses and plan the size of your house accordingly.
4. Buy the size you NEED: If you are newly married, you maybe able to live for 3-4 years of your life in a 1 bhk, once you have a kid move into a 2 bhk. If your parents wish to stay with you for a long period, you may need a 3-4 bhk depending on how many kids you have..So do not be in a hurry to buy a big house…You can always upgrade to a bigger house later. Maybe in a better locality?
5. Shop around for a house as well as a mortgage: when you go to a mortgage company, remember they are sales people too! They may (mostly do) have some house son distress sales. Ask them about it. Ask them about builders, locations, ideal size based on your needs AND your ability to buy. Mortgages have to be considered very carefully. Hdfc charges a little more than State bank of India, but gives all services brilliantly. Your documents are preserved better. Almost everything can be done online or through phone. Consider all this before you choose your lender….
start home hunting! all the best…
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