Published on: 29 September 2014
The challenge of buying a home for the first time can seem so daunting that it is tempting to either just go with the first house that falls in your price range or continue to rent. To help you demystify the process and get the most out of the purchase, let us examine what you would need to consider before you buy a new home, what you can expect from the buying process itself, and some handy tips to make life easier after you purchase your first home.
You would first need to determine your long-term goals and then determine how home ownership fits into those plans. It could be that you are simply looking to transform all those wasted rent payments into mortgage payments that actually give you something tangible. Most people see home ownership as a sign of their independence and enjoy the idea of being their own landlord.
Here are five major questions that you would need to ask yourself:
Now that you have made your buying considerations and have decided to take the big plunge, it is time for you to know what you can expect from the home buying process itself. Remember to be mentally prepared to tackle the hassle (mandatory paperwork, offers, counter-offers, etc).
Following is the general progression that you can expect:
Find a home:
Ensure that you take advantage of all the latest available options such as prominent online portals for finding homes on the market, including using your real estate agent. The real estate portals or agents would fix your home parade (the slightly tiring part). Further, put in a word in the ears of your friends, family, and business contacts because you never know where a good reference or lead on a home might come from.
Review your financing options and secure financing:
Review your finance plans. If it is a home loan that you are looking for, get ready with your margin money. In simple words, it is time now to plan how you would pay for your new home.
Make an offer:
Your real estate agent (portal, company, or an individual) will help you decide on how much money you would want to offer to pay for the house along with any specific conditions you want to ask for. Your agent will then present the offer to the seller’s agent. The seller will either accept your offer or issue a counter-offer. You can then accept or continue to go back and forth until you either reach a deal or decide to call it quits. If you reach a consensus, you would then take the deal into the finance stage. 3
Obtain a home inspection:
Even if the home you plan to purchase appears to be flawless, remember that there is no substitute to have a trained professional inspecting the property for the quality, safety, and overall condition of your potential new home. If the home inspection reveals serious defects that the seller did not disclose, you will generally be able to rescind your offer at this stage itself. Please remember that this could present an opportunity to negotiate with seller on making repairs or on discounting the selling price.
Close or move on:
If you are able to work out a deal with the seller, if the inspection did not reveal any significant problems, you should be ready to close the deal and become a proud owner of a new home. Closing basically involves signing tonnes of paperwork, due diligence, and stamping in a very short time period, while praying that nothing falls through at the last minute. Further, you might have to pay money professionals for getting the home appraised (banks require this to protect their interest in the house), doing a clear title search, and completing the paperwork for home loan procurement. Please note that this entire part could become a smooth ride if you appoint an expert to do this on your behalf. Apart from relieving you from the shackles of mandatory paper shuffling, these experts would ensure that your interest is safe all through the whole process right from home search to deal closing.
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