Guidelines to prepare you financially to buy a house

Getting ready to buy home can be a daunting process for everyone, especially for those people who don’t have experience in making such big investments. Rushing through this multi-step, long-term financial process than calculating how much home loan you can afford, saving for a down payment and fixing any blemishes on your credit report can prove extremely costly. Here’s a guidelines to prepare you financially to buy a house.

Research the market:

market-research-firmsThe first step is to what city or location you want to live in. Do the detail research on the location where you want to purchase the house, so you can discover what is on offer and at what price. Visit a place in person, pay special attention to smaller details. Also try to get a clear idea about the real estate market in the area. You should also consider the total cost of living, city’s demographics, access to public transportation and local job market.


imagesIt is important to use objective criteria while deciding how much you can afford to spend. Keeping in mind your current financial picture makes an approximate calculation about the amount of EMI you can pay. Make sure the sum total of your EMI’s should not exceed 40% of your in-hand salary. Thus, if your in-hand salary is Rs. 80,000, your monthly EMI shouldn’t ideally exceed Rs. 32,000 each month. Also don’t forget to consider all other your financial commitments like credit cards, monthly bills, family’s monthly expenses etc.
Supposing the bank will only give a loan for 80% of the property value and 20% must come out of your own pocket so make a wise decision taking care of all these parameters. And if you wish to increase the loan amount, you can do it by clubbing your spouse’s income with yours.

Boost your credit:

In qualifying for a loan your credit score plays an important role. A good credit score gets you a lower interest rate. Banks take into consideration, your salary, your credit card dues and your past record of loan repayments before approving the loan. So before applying for a home loan, know your credit score to ensure that your credit history and personal details are in order.

Down Payment:

hipotecaThe bigger your down payment, the smaller your home loan will be and the less you will have to pay in interest. So start saving the money to make the down payment and closing costs of the house. Down payment is generally 20% of the cost of the property, which banks won’t finance. We recommend you to save as much you can, more than 20% if possible.
While saving money for down payment, make sure you will have enough savings left over to pay for any house improvements, decorations and maintenance costs that may pop up.

Extra Charges:

Get complete information about the extra charges so that you are prepared for all the expenses that can crop up! There will be property taxes, décor, maintenance, repair etc. Don’t forget to add all this to your budget.
It is always wise to spend time on planning it well as buying a home is a big financial investment. Being mentally prepared for the procedure is equally important too. However, it can be a smooth experience with adequate preparation and planning.

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