Introduction
Possessing a home of ones own is dream of all. Not only it gives you a sense of confidence but it also boosts your personal goal of financial independence. But in buying a home for oneself there is some basic things that you shall consider. First sit down with your family and try to answer the most important question that why you want to buy a house. The best objective of buying a home for oneself is to increase your financial independence and also to give your standard of living a face lift.
It is not always important that the house is considered as a good investment only if there is a value improvement in the property. Buying your house saves a lot of rental expenses, it gives you a income tax advantage and it also give you an opportunity to own an asset that can be sold for cash in times of great personal crisis. This is the reason it is said the the earlier your start the better. The property is getting costlier day by day and for it is beating inflation.
Check your affordability before buying a home?
These days 95% of individuals buy property by availing home loans. One must check their affordability of paying the monthly EMI (mortgage). As a rule of thumb, bank checks your affordability by calculating your total income, and then computing 25% of your calculated income which should be more than the cost of the house. The cost of the house includes monthly mortgage, insurance premium, property tax etc. Suppose your monthly income is $1000 then the cost of house should not be more that $250 (25% of $1000). In case there are other loans in your name like education loans, credit card balance etc should not be more than 36% of your total income.
Suppose the total income of Jack is $2,000 per month. As per the rule of thumb 25% of $2,000 ($ 500) can be the maximum cost of house which included mortgage, tax and insurance. Assuming that almost 90% of cost of house is the mortgage it means you can take loan with maximum monthly EMI (mortgage) of 90% of 500 = $450.
Cost of investing in house explained
Very often investors gets a shock to realize that the down payment is not the only cash requirement in buying a home for self. In India other charges can be as high as 15%-16% of the basic cost of the house (Area X Rate). These charges include infrastructure charges, stamp duty charges, registration charges, legal charges, government taxes etc. In total these charges can be 15%-16% of the basic cost of house.
Cost of managing a house
After you have bought the house you will required to pay other expenses related to owning the house like utilities, property taxes, maintenance, interior renovation. It is always wise to list down these expenses and prepare and estimate for the future new expenses.
Always Check your neighbors
After you have purchased a property you can do less about your neighbors. Better will be to check on them before you start living with them. Also check if markets, schools are near and accessible. Check the crime rates of the area and also check if transportation is easier to get. Try to buy a house in a locality where they are quality construction is done in neighborhood. The prices of such property increases very fast. This will also induce so price advantage to you.
A first time home buyer should always try to find a broker to finalize their first property. These brokers know the market well and can save a considerable cost for you by negotiation with your developer. Try to finalize a broker who is your broker not a broker who is finalized by the seller. Sellers brokers works to maximize the profit for the seller.
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