First-time homebuyers must remain vigilant and aware throughout the home-buying process to avoid any unforeseen issues. Here are some of the best pieces of advice for homebuyers.
How to Get StartedBefore you kickstart your search for a new house, read the following tips as it will help set your expectations and prepare you for pitstops on the way.
Make a Budget Plan
As a first-time homebuyer, the most important thing to consider is the budget. Buying a house is a significant investment; so, it's always good to know what you want and how much it will cost you. If you have an ideal location in mind, start by researching the real estate prices in that area. Also, if you're buying a house on EMI, look up the average down payment, mortgage payments, property taxes, and maintenance expenses that you may need to pay down the road. It is a commonly repeated advice for homebuyers to strategise for the down payment and the subsequent monthly mortgage payments.
Remember, that while it is the biggest, a down payment is not the only expense you'll be incurring. There are other expenses, such as closing costs, moving costs, and the costs for renovations, that you should factor in. By clearly understanding your budget and payment strategy, you can make informed decisions about the type of home you can afford and avoid overextending yourself financially.2.
Prepare Different Lists for Needs and Wants as First-time Homebuyers
It is extremely important for to get clarity on their negotiable and non-negotiable requirements. If you're buying a house with your partner, it is great to start with different lists, and then integrate them to get a master list of needs and wants.
Under the 'needs' column, include everything that is extremely important for your ideal home to have. This could include the location, the type of house, the number of rooms, the amount of ventilation, etc.
Under the 'wants' column, include things that are nice to have, but not necessary. As expert advice for homebuyers goes, this list will come in handy not only in shortlisting houses but also in budgeting. Make sure your budget accounts for everything from the 'needs' column. Add items from the 'wants' column only if you have an extra budget.
Research About the Real Estate Market
Researching the real estate market thoroughly is probably one of the most crucial advices for homebuyers. A basic understanding of the current market conditions will help you make informed decisions and avoid missteps. Start by checking property rates in the areas you like. A good rule of thumb is to check the pricing trends in these areas over the last few months and years. This will help first-time homebuyers determine whether it's currently a buyer's or seller's market and negotiate accordingly. By doing their research, they will be better equipped to navigate the home-buying process.4.
Check Different Mortgage Options
Almost all first-time homebuyers take a home loan or a mortgage to buy their dream house. In most cases, the bank will consider the house itself as collateral. However, in some cases, the bank may ask you to pledge other assets that you own as collateral. Once something is pledged as collateral, the bank gets the right to seize it if you default on multiple payments. Different banks might provide mortgages at different interest rates. So, make sure you explore your options before making your decision.5.
Look for Pre-Approved Loans
For first-time homebuyers, pre-approved loans can be a better option than starting the home-buying process without any financial plan in place. A pre-approved loan is where the lender evaluates your financial information and tells you how much money they will lend you for your new home.
This information can help you budget and narrow down your search accordingly. It is advised for homebuyers to have a pre-approved loan so that the home-buying process is much smoother. Sellers may also view pre-approved buyers as more serious and may be more willing to negotiate on the price.6.
Understand the Offer Process
If you have followed all the above-mentioned steps, then you'll be more adept at making a good offer. You'll be aware of the prices of competitive properties in the neighbourhood. You'll have a decent idea of whether the property you wish to buy is in demand. You will likely know how long the property has been up for sale. These factors and your own budget considerations will help you make a good offer for the property.
Once the offer has been made, the seller may accept, reject, or negotiate over it. This is also a good time to discuss how much deposit you'll be making. Generally, the deposit amount is no more than 1-2% of the property's price.7.
Important real estate tip - Opt for a Home Inspection
Before finalising your purchase, it's important to schedule a thorough home inspection. This inspection will give you an idea of the property's current condition and help you identify any issues that need to be addressed before closing the deal. It's not uncommon for agents or sellers to offer misleading information about the house to first-time homebuyers. So, a thorough inspection can help you catch any discrepancies and avoid unexpected repairs or expenses. The inspection can cover a range of areas, including the foundation, roof, plumbing, electrical systems, and more.
=> Read Also:- Real Estate Terms 101: 15 Crucial Definitions for Investors!8.
Get an Insurance!
First-time homebuyers should consider getting homeowners insurance. Some lenders may require you to have home insurance as a condition of your mortgage. But even if they don't, it is recommended that you do your research and weigh the pros and cons of home insurance. Asking the seller about their current insurance policy can help you determine what type of coverage you need and how much it will cost. Your real estate agent can also be a valuable resource in this discussion, as they may have some experience working with insurance providers. They can offer advice for homebuyers based on the specific situation.9.
Close the Deal
Once you've completed all necessary inspections and paperwork and are satisfied with your purchase decision, you can go ahead and close the deal with the seller. It's important for first-time homebuyers to get familiar with all the necessary closing documents before the actual closing date. This will help ensure the process goes smoothly and is as hassle-free as possible. Your lender and real estate agent will provide you with a list of the documents you'll need to review and sign, including the mortgage agreement, property deed, and various disclosures.10.
Keep physical copies of all the documents
Don’t rely on cloud-based storage only, keep a copy of all the documents saved in a locker or somewhere where you know it will be safe in the future. You might consider this method obsolete but, there is absolutely no harm in keeping one as you cannot always rely on the online system.
Buying a home can be a daunting experience, but with proper planning and expert advice for homebuyers, it can also be a rewarding and exciting process. As a first-time homebuyer, it is crucial to do your due diligence and take the necessary steps to ensure a smooth and hassle-free process.
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