Real estate has always been considered a highly valuable asset. If you are a first-time home buyer or you’re looking to make a sound investment with your savings, being well-versed about how to buy a home is crucial before signing a contract. On the one hand, while you may be contemplating which are top locations to buy your dream house; on the other hand, buying a house in itself can be an exciting albeit complex process.
While many may spring for realtors to land the best deals, you must do your due diligence to ensure that buying a new home is a positive experience. It always pays to plan out your path and go step-to-step to avoid making any blunders.
Looking for some tips and tricks on how to buy a house to ensure you make the most of your money? We’ve curated a step-by-step home buyers’ guide to help you ease into the process of buying a house. Read on to find out how.
1. Determining the Location
When understanding how to buy a home, the first step is to figure out what kind of space works for you. Buying a house holds a lot of sentimental value and it is easy to get swept up in emotion. Even if you are a first-time home buyer, it is important to look at the home-buying process objectively instead of making rash decisions. There are these top realtors in India who can help you get your dream house. Start with deciding whether you want to settle in a premium location or you wish to own a quaint place in the suburbs.
Additional Read: Top Ideal Locations in India to Buy Your Dream Home
For the next step, consider factors and aspects like the number of family members, pets, availability of services in the vicinity and the distance from your office to your home before going house shopping. Take aspects like the safety of the neighbourhood and nearby schools if you are a family man or the closeness of the airport if you travel often for work. Setting such preliminary filters before you buy property can help you narrow down and find the perfect location.
2. Deciding whether it’s the Right House
Once you’ve decided the location of your house, it’s time for you to find the right house. There are several factors to consider about the type of house you wish to live in as they can make you reconsider your location. Start with deciding if you want a big house complete with a backyard and white picket fence or a cosy studio apartment for you and your partner. While buying a big home may seem like the ideal choice, you may end up going over budget if you plan to settle in a premium neighbourhood.
Once you’ve finalised the size of house and location, you need to figure if you want a ready-to-move-in house or a new home that you wish to decorate from scratch. People who travel for work might prefer a house that is low maintenance, easy to clean and comes with appliances like an oven and washing machine to avoid going furniture shopping. Families with kids might prefer buying a home to create a safe space for the kids along with fun installations for the children to enjoy.
3. Consolidate Your Finances
Once you’ve found the perfect spot, check your financial status to figure out how much money you have ready for the down payment. If you have pending loans or medical bills, reconsider whether it’s the right time to buy property. Consider additional expenses like closing costs, after move-in expenses and extra repair costs. Additionally, check for hidden and additional costs involved while buying a new house. Be prudent and know how to calculate re-sale value of your house. If you’re buying a raw space, you will most likely spend a hefty amount on decorating your new house. Always plan for closing costs to avoid overbudgeting problems when thinking of how to buy a home.
To make sure that you can handle the finances, check your credit score beforehand to avoid any unpleasant surprises. If you have a credit score that suffices the purpose, you can go shopping for home loans to cover the costs of buying a new house. Since the bigger the down payments, the smaller the EMIs, you may be tempted to take money out of your extra savings. However, you may benefit from home loans and mortgages for buying a house instead of dipping into the savings meant for your future.
Additional Read: Hidden Costs Involved While Buying A New House
4. Getting Pre-approved for Home Loans
When opting for taking a loan for buying a new house, it is important to get prequalified and not wait until the last moment to submit your application. This helps to avoid any bumps in the road and go through the homebuying process effortlessly. To get approved for a loan, you need to provide all your financial information and legal documents to your lender in advance. This will also help you set the exact price range and not overspend when you buy property.
While home loans applications have gained a bad rep for their tedious and drawn-out process in the past, Tata Capital has revolutionised the home loan industry with a wide range of housing loans to choose from along with the highest home loan eligibility to ensure hassle-free documentation, effortless application and quick approval to help you buy the home you deserve.
5. Finding the Right Agent
After establishing your finances, you need to find a good realtor who can get you the best deals despite being a first home buyer. A real estate agent should have extensive knowledge about the neighbourhood and society you’re looking to buy property in. Real estate governing bodies like NAR India provide credible realtor services to protect your money from fraudulent developers and agents.
The right realtor will be highly motivated, listen to your requests and work hard to get you the best properties for your budget. A trustworthy agent will also help you buy property with the best rental rates and the highest resale in the area value when opting for a smart investment. Here is a list of top realtors in India who can help you get your dream house.
6. Getting the House Appraised
While you have a good realtor on hand, you may benefit from appointing a real estate appraiser when buying a home as well. A real estate agent will help you get good deals on properties but an appraiser will closely examine the property and do an extensive market analysis to determine the true value of the house. A real estate appraiser will gather information about aspects like the measurements of the house structure, geographic importance, property characteristics such as noisy streets and the architectural quality of the property for market comparison and ensure that first-time home buyers get value for their money.
Additional Read: Simple Tips On How To Calculate Resale Value Of Your House
7. Requesting a Home Inspection
When buying a new home, you need to go through every little detail with a fine comb. While paying a home inspector may seem like an unnecessary cost, they will prove to be beneficial in the long run. Home inspectors are different from home appraisers as they analyse the house closely to check for any hidden problems like mould, pests, asbestos, termites, weak foundation, leakage or drainage issues that it may possess. If the problems are fixable, you can negotiate with the seller to further lower the price of the house and land yourself a rewarding deal.
8. Don’t Be Afraid to Negotiate
If you are a first-time home buyer, you may be wary of negotiating and bargaining the price of the house. However, it is a crucial part of the homebuying process and helps you save on unnecessary costs. If the seller has a fixed rate, you can save money by asking the seller to either provide for everyday appliances and utilities like a water or gas connection or to cover the cost of extra repairs and maintenance if you find a problem with the house during the inspection. If it is buyer’s market, the seller may negotiate the price just to get the house off the market. Frugality is key in saving your hard-earned money and getting the most out of your new house.
9. Making Rational Decisions
When buying a new home, if you come across a house you love, you may lose objectivity and be tempted to make a higher bid to own the house. However, this may not be considered as a practical move even if you have enough savings. Since you will end up spending more than the house’s market value, this step will instantly bring down the resale value and turn your brand-new property into a bad investment. Wait it out instead and trust your realtor and real estate appraiser to do their work and get you better deals on equally lavish properties.
10. Be Patient During Escrow
Once you’ve made an acceptable offer to the seller, you must sit tight and wait patiently as you go into escrow. The escrow time is set up to protect the buyer, seller and lender. Give time to the escrow holder to make sure all the necessary documents and information are in place to complete escrow. This will also give you time to rethink your choices as you are given the option to sign or not sign the mortgage papers at escrow. Buying a new home should always be a well-thought-out and planned decision.
11. Registration and Documentation
If you’re wondering how to buy a house after making a deal, you are also likely to wonder about how to do registration of a new house. After clinching a deal, you must submit all documents to the Sub-Registrar of Assurance. Section 17 of the Indian Registration Act mentions all the documents that require to be submitted to purchase property, prevent fraud and guarantee ownership of property. For successful authentication, these documents require the signature and proof of identity of the buyer, seller and two witnesses. Post submission, these documents are checked by the Sub-Registrar of Assurance and will decide if these documents are registered or not.
Next, stamp duty is mandatory; but how to calculate stamp duty online and what is a stamp duty? Under the Indian Stamp Act, the buyer is obliged to pay 1% of property value for registration charges and 4-10% as stamp duty. Evasion of stamp duty is a punishable offence and costs the first home buyer 10 times more than the original fee. It is important to remember that every state has a different rule book and are authorised to modify the central laws depending on their region. Since you cannot become the rightful owner of the property until registration, it’s important to follow up on these steps meticulously.
Additional Read: How to Do Registration Of A New House?
12. Time to Move In
Now that you’ve closed on your dream home, you can finally step foot into your own space and rejoice in the bliss of your own home. Once you’ve basked in the glory, you need to follow up on certain duties to finalize your move. Change your mail address, update all your official documents and redirect all your subscriptions to your new home. You also need to cancel all the utilities in your old home to save money and avoid getting a late fee. Install your new appliances, sign up for all the utilities in your new space to finally live in the peace of your new house.
While our all-inclusive guide has all the details you need to know on how to buy a home, here are some additional tips and tricks to avoid making any blunders and help you close successfully on the best deals.
- When looking to buy a new house, always map out your property lines. This helps you know how much of the land you rightfully own and avoids any potential border disputes with your neighbours which can disrupt a happy home. It also helps ensure that you don’t accidentally evade or pay extra property tax.
- Before signing the papers, drive through in your potential neighbourhood to make sure that it’s the right place for you and your family. It may seem like the perfect house on paper but you may end up distraught after moving if the neighbourhood doesn’t agree with you.
- Always do thorough research. Even if you are a solo homebuyer, researching nearby activities, schools, availability of transport and other services have a huge impact on your resale value. In fact, buying a house in a good versus bad school area within the same town can affect the estimation value by 20%.
- If you like a house which is in high demand, bidding an odd number can garner the attention of the seller and take you seriously as opposed to categorising you in one of the bidding groups.
- Do not fuss over the right time to buy. Since real estate is cyclical, there’s no correct time to buy property. Chances are you’ll miss out on a great opportunity just because the timing didn’t feel right.
Inspired by our home buyers guide but wondering how to plan the right budget when you buy a new home? Connect with Tata Capital to avail our tailored home loan that cater to your every need. We offer attractive home loan interest rates, easy repayment, and flexible EMI options to help you land the best deals when buying a new house as a first-time home buyer.