Proper planning is essential when you set out to buy a home. Analyzing and thinking about the various factors that are a part of buying your new home is not just recommended but essential. If you are someone who has been wanting to buy his/her own house from a long time, the waiting period is about to end now.
2018 has been predicted to be the best year so far for people wishing to buy their own home. Thanks to recent changes in regulations, home prices are becoming more and more favorable for buyers. These changes have also made it easier to rule out any and all qualms you have about buying your home, since only RERA approved projects are available for you to choose from.
All these things together make 2018 a uniquely beneficial year for everyone thinking of buying a new home. Once you have made up your mind about buying a new home, here are a few steps you need to follow to prepare yourself for this huge decision:
1. Check and double check your credit score- A credit score is a number that has been created after careful analysis of your spending habits and credit history. The number you receive is on a score of 350 to 800, with 350 being the lowest and 800 being the highest. There are many agencies like CIBIL that prepare your credit score report. Applying for a credit score report is very easy- all you have to do is submit an online application on CIBIL’s website. For home loan purposes, a credit score of 700 or higher is encouraged.
2. Complete other loans- A home loan is expensive, so it is important to keep your finances in order and complete other loans before you are ready to take the plunge and buy a new home. Also, completing your previous loans enhances your credibility when you apply for a home loan. It also does wonders in boosting up your credit scores.
3. Keep your credit card purchases in check-
When you go to a bank for getting a loan, your credit card purchases are always scrutinized. Therefore, to avoid too many outstanding credit card payments, keep the purchases made by credit card limited in number and amount. This also includes buying new credit cards, as the more credit cards you have, the less your credit score becomes. Learn to utilize your existing credit cards the right way by managing the purchases and making the payments on time.
4. Collect all your documents and keep them ready-There are a lot of documents required during the whole process of buying a home. Make sure you keep them ready well before time to avoid any last minute hassles. The documents that are usually required are:
a. IT returns for the past 3 years
b. Bank statements of the past 6 months
c. Salary statements of the past 3 months
d. Government issued document as address proof
e. Photo ID
f. Passport sized photographs
5. Get a pre-approved loan- A pre-approved loan is given to people with a stable income, reasonable employment, and minimal credit. A pre-approved loan means as long as you don’t drastically change any financial aspect of your life, your loan is guaranteed. It shows that the bank is willing to give you the loan money since it considers you trustworthy and knows you can pay back the entire amount. This gives you a huge edge over competitors for the same home as well, since home sellers usually prefer those who carry the seal of pre-approved loans.
6. Become aware of every expense related to your home-</strong
Purchasing a home comes with a lot of small purchases, things that you may not factor in while buying the home, including repairs, property taxes, etc. When you select a home, make sure you are capable of handling all these extra charges that come with buying your home, while also keeping some savings for the future.
7. Don’t make any sudden financial changes in your life-Since a pre-approved loan is based on your financial condition at the time of filing the application, any changes you make post the approval will negatively affect your loan and your desire to buy a home. When you are planning to buy a home, conserve your other expenses to as minimal as possible. Activities like getting a new job or applying for a new car loan act as deterrents to your home loan application and also decrease the home seller’s trust in you. It can get frustrating if, after completing all the steps, you miss out on buying a home.
Knowing what to do before you buy your new home is critical knowledge, and if you don’t plan and act well, you will have to settle for something less than the home of your dreams! So it is very important to educate yourself about the huge commitment you are going to make. These tips are just the tip of the iceberg of a much larger and deeper research that needs to be conducted. Start doing the proper research today!