Practical Real Estate Tips For First Time Home Buyers In 2022
Have you been intending to buy your first home? The appeal of first-time homeownership is strong. Your priority might be to create generational wealth or to create an investment to sell when you retire. Many individuals dream of owning a house but making that reality involves hard work, diligence, and financial commitment. As a first-time homebuyer, you must exercise extreme caution and have a thorough awareness of the processes involved.
Buying a home is still one of the biggest dreams of millions out there. Finances being the major hurdle, a lot of research, planning, and patience are also involved in buying a home.
Even after a government’s push in tax benefits, affordable housing schemes, etc., currently, only 50% of the Indian population owns a house, and there is still a long way to go. Raising market risks and the unofficial pay cuts have thrown some light on the pre-existing advantages of having a home of their own.
The dream of buying a home comes with a sack of responsibilities. It is an arduous task to materialize your dream of owning a home for first-time buyers. But the journey is worth traveling!
What are some real estate tips for first-time homebuyers?
Here are some tips for first-time homebuyers that will help you save some time, money and avoid unpleasant surprises.
- Assess the builder’s credibility: It is desirable to ensure that the builder has a good reputation. You must ensure that the builder has a good track record of handing over the projects on time. You will also have to look after your current living expenditure like rent, as you are a first-time homebuyer. Hence, any lag in property completion would increase your present expenditure. It would help if you approached the right agent for a safe transaction.
- Find a home that suits you: Planning plays a crucial role since it ensures a smooth voyage. It is the starting point where you streamline your choices. When you plan, you decide on factors like what type of house you want, your financial status, and many more. You have to decide well in advance about your house’s choice, like an independent house, villa, and flat. This affects your budget as the independent house, villa, and flat cost all vary for the same area.
- Assess the purpose of the purchase: Purposes of investing in real estate vary from person to person. You must assess the purpose carefully before buying the property. You may invest in the property for residential or rental purposes. You have a few more parameters like amenities and locality to evaluate the property if you buy it for yourself. It would be best if you planned for unforeseen expenses like maintenance costs of the property. These costs are common for both commercial and residential property.
- Bag yourself the best amenities and infrastructure: In today’s hi-tech world, ventures have advanced infrastructure and promising amenities. But it would be best if you made a wise choice as it is you who have to bear the bills on a long-term basis. So, do not try to overreach lest you make an expensive mistake. It is always desirable to weigh the needs before you make a choice. If you wish to sell the property anytime in the future, locality becomes one of the factors of evaluating the property’s worth. The properties in the area with good amenities and scope of development are always at the top. So, look out for the areas where there is room for development rather than the fully developed areas that are saturated markets. It would increase the graph of the property value with time.
- Evaluate the expenses and plan accordingly: You may set the goal in your financial bracket in order not to run into bad debts. The common expenses that you spend on are the initial, move-in, and refurbishing expenses. You must set some money aside for any unforeseen expenses like maintenance. You must also budget the project of buying a home so that it does not turn into a white elephant. Higher the financial bracket, the higher the expenses. So, have a check on the limits up to which you may stretch.
- Put your savings into action: Underline the point of home loan eligibility. You would be eligible for only 75% to 90% of the value of the property. It might require you to pool the rest of the amount. So, savings becomes a must. On a friendly note, review your regular expenditure to pool some more for your dream house. It reduces the burden of repayment. This would be a decision worth taking.
- Find the best financing option: You may require taking a loan to own a property as big as a home, and for this, you have two options to consider – long-term loans and short-term loans. You may go for a long-term loan if you have a secured job. A long-term loan is the best if you want to reduce your EMIs. Short-term loans have higher EMIs when compared to long-term loans. This is self-explanatory. Having said this, in case of a job with high risks, you are advised to go for a short-term loan. Availing a loan shall fetch you with some tax benefits that first-time homebuyers can enjoy. At this point, the home loan interest rates are at a 15 year low. Several lenders have reduced the rates, and you can grab such opportunities to reduce your expenditure. Further, you need some essential documents to process the loan. They are property link documents, encumbrance certificates, income proof, to name a few.
- Look into the legal prerequisites: Ensure that the property has an approved plan. Also, the land documents must be clear and recognized by and registered with the local authorities. You must ensure that the property is litigation-free. Otherwise, the loan will not be granted, and you may also have to face legal issues in the future. The repercussions may be as severe as losing your property if enough attention is not paid to legal aspects.
- Acquaint yourself with taxation: There is a provision for an income tax rebate on home loans for first-time buyers. This is done to encourage new entrants into the real estate market. The principal amount that you can claim is up to Rs.1.5 Lakhs, and the interest paid on the loan can be claimed up to Rs.2 Lakhs per annum. But you can claim this only after the possession of the property. The budget 2021 has revised the tax rebate limit to Rs.3 Lakhs till 2022. Homebuyers can save some money additionally. If your spouse also has an earning hand, then you can hold joint property. Both the investors can claim a tax rebate up to Rs.2 Lakhs interest each. This helps in acquiring a bigger property enjoying the benefits. You can buy properties of higher value jointly. If the property’s value is higher, the returns are high, which ensures a safer retirement life.
- Be extra cautious with subvention schemes: In a subventions scheme, the buyer, developer, and the banker enter into a tripartite agreement. Initially, you have to pay 5-20% of the property value. The dealer pays the EMIs till the completion of the construction or until mentioned in the agreement. It is the deal of the day to first-time buyers who purchase a property. Because, during the construction, the first-time buyers also have to look into the present living expenditure. You can leave behind the tension of delay in handing over the project as it costs the builder himself. It increases the credibility of the builders. But, nothing comes for free. The properties with subvention schemes have a higher price than those with the same features in the same vicinity. You end up paying an extra amount that you might not have planned for. It would be better to calculate the price with and without an offer before you jump into such deals that look attractive.
- Pay regular visits during construction: Paying regular visits to the site is important. It avoids any deviations and tricks in the plan and also ensures the quality of the construction. It is also important to intimate the lender as the loan is released in installments of the construction. This helps in assessing the builder’s credibility about the quality of construction.
- Choose a reputable developer: It is critical to assess the reputation and track record of the builder of the property where you intend to purchase your home. Determine whether the builder has a reputation for finishing projects on schedule, for building of high quality, for delivering on promises, and so forth. Before you sign the contract, investigate the credibility of your builders. Different real estate agents thrive at different sorts of properties. Invest in a real estate business that is recognized for its excellent projects, on-time handovers, and has created an unrivaled reputation through decades of service to make the process easier
Real estate is an ocean of opportunities—the more information on hand, the better the journey. You must plan and follow it accordingly. It avoids any procedural hiccups, and you become the great owner of a lovely house. When all the tips mentioned above are followed, one may spread their quilt to dream more! Happy dreaming!
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Top tips for first time home buyers FAQs:
Investing in a home provides one with a sense of security. Home is an investment that performs stably when compared to the volatile instruments in the market. First time home buyers also have an edge due to the policies and schemes created to encourage new entrants into the real estate market.
First-time buyers may go through all the blood, sweat, and tears in realizing the dream of having a home on their own! So, it is preferred to plan to avoid the pitfalls and ensure a smooth transaction.
The first time home buyer should keep in mind the following things
a)Understand the true cost of buying a home as there are several other costs involved like move-in expenses and maintenance costs.
b)Strict adherence to the budget to avoid running into bad debts.
c)First-time buyers must also be aware of the subvention schemes and their benefits to avail them.