Am I Ready to Invest in a Home
The answer to this should be arrived at after considering the following variables:
- Do you have a steady source of income from your business or your job? Do you have a steady job for atleast the last 3 years? Is your current employer a steady profitable business or are you working with a startup or a company with a shaky future?
- Do you have a good record of paying your bills and past loans? In short do you have a good credit record?
- Do you have money saved for making a down payment?
- Do you have other expensive outstanding loan repayments and debts?
- Do you have the ability to pay a substantial amount in EMI every month plus other costs?
- If your answer was yes to the above questions then you are ready to buy an upscale property!
Should I Buy Or Continue to Rent
Actually these two are highly disparate questions. The big advantage with renting is that you will be free of most of the maintenance costs and responsibilities that come with owning a home. But by renting, you lose the chance to build equity, take advantage of tax benefits and insulate yourself from rent increases. Also you may not have the right to decorate as you like without permission and will always be at the mercy of the home owner when it comes to terminating the rental lease. As you can see, owning a home has many advantages. Everytime you make an EMI payment you are building equity and that becomes an investment. By owning a home you are also entitled to tax breaks that will help you in dealing with your new financial responsibilities such as – insurance, real estate taxes and maintenance which can be large and substantial. But when compared to the freedom, stability and the security of owning your own home, the decision to buy a home becomes a worthy decision.
How Does the Finance Company Decide My Maximum Loan Amount
The Bank or lending institution will consider your debt-to-income ration which is basically a comparison of your pre-taxable income with housing and non-housing expenses. Non housing expenses will include long term ongoing debts such as car or other legal debts such alimony or child support. The lender will also consider your ability to pay cash for down payment and closing costs, your Credit Score etc. which will all go towards determining the maximum loan amount that can be made available to you.
What Should I Look For When Selecting a Home
Apart from comparing the homes that you are in the process of shortlisting with your ideal minimum criteria and wish lists, you should also consider the following check points:
Is there enough room for the present and the future as your family grows?
Are there enough bedrooms and bathrooms?
Is the home pleasant, airy and has ample natural light?
Do the pre-installed mechanical and electronics systems and appliances work?
Do you like the floor plan?
Will your furniture fit in the space? Is there enough storage space for all your needs?
Imagine the home in day and night, in good and bad weather. Will you feel happy and secure inside round the year?
Are the property related legal documents clean and clear?
Have you done due diligence on the property?
Carefully consider each and every home that you inspect and ask your real estate agent to highlight the pros and cons of each home from a professional and legal standpoint.
How Many Homes Should I See Before Choosing One
That really depends from person to person. Ideally you must visit as many homes as it takes to help you and your family feel satisfied to choose the one you finally settle upon. On an average, buyers in the market generally see an average of 15 homes before choosing one. Just be sure to clearly communicate with your real estate agent about your preferences, likes and dislikes so that precise homes matching your preferences can be shown to you thereby saving time and effort on both sides.
What is Home Inspection
Professional Home Inspection is a relatively recent concept in India and Gupta & Sen also provides professional home inspectors to our clients once they shortlist a home that they want to buy. A home inspector basically checks the safety parameters of the house focusing especially on the structure, construction and mechanical and electronic systems of the house and will make you aware of repairs needed for faulty installation or construction. The inspector will not evaluate whether or not you are getting a fair value on the house. The inspector only checks and will give an estimate on the repairing cost involved for:
- The Electrical system
- Plumbing & Waste Disposal
- Water Heater
- Insulation & Ventilation
- Water source & quality
- Potential Pest Problem
- The Foundation
- Doors, Windows, Ceilings, Walls, Floors & Roof
- Hi Tech Security Systems, Home Automation Systems Promised by The Developer (if any)
Remember that is a good idea to have a thorough inspection of the house that you intend to buy before you sign on the offer documents because once the deal is closed you have bought the house ‘as is’. If you are in a hurry, you must include an ‘inspection’ clause in the offer during the negotiation phase. An inspection clause will give you an ‘exit’ route if it is discovered after buying the house that the developer or previous owner has reneged on the promises made before buying. The clause will give you the crucial ability to renegotiate the purchase price if serious problems are found which require expensive repairs. An inspection clause can also specify that the seller or developer must fix the problem(s) before you buy the house. Though not mandatory, as the future owner of the house you should be present when during the inspection of the house in order to be better informed about everything and to confirm the discrepancies found if any.
How Should I Make an Offer
Once you have zoned in on a particular home and decided that this it, our real estate agent will help you in making an offer to the Developer / Seller which will include the following information:
- Complete Legal description of the property
- Amount of Earnest Money to be deposited
- Down Payment and financing details
- Proposed Moving-in Date
- Price you are offering
- Proposed Closing Date
- Duration of Time the offer is valid
- Details of the Deal
Do remember that a successful sale depends on the negotiation of a satisfactory contract with the seller and is not wholly dependent on only your own offer.
How Do I Make an Initial Offer
To calculate your initial offer, you can take guidance from your real estate agent but of course it is your own instinct that will finally decide what you think is a fair price for the home that you plan to own. To calculate the offer price, you must keep several factors in mind:
- The price that homes like yours typically sell for in that area
- The condition of the home
- How long the home has been on the market
- Financing terms
- Seller’s Situation
This is also a good time to hire a due diligence expert / private investigator who can probe all financial and legal matters pertaining to the title and ownership rights of the property and also find out whether the home has any ongoing legal dispute or whether the developer has flouted any environmental or legal policy which could embroil the property in a future legal problem. By the time you are ready to make an offer you must have a good idea of what the home is worth and what you can afford to pay for it. Also a bit of give-and-take negotiation is fair game and is common when buying a home. The buyers and seller usually go back and forth until they can agree on a final price.
What Is Earnest Money
Earnest Money is the money that is put down to show your seriousness about buying a home. It must be large enough to indicate good faith and usually hovers around 1 – 5 % of the purchase price. If your offer is accepted by the seller, then the earnest money becomes part of your downpayment or closing costs. If the offer is rejected then the money is returned to you. If you back out of a deal, you will have to forfeit the entire amount.