How much is too much while buying a home?
It’s a tricky situation, when you are prepared with a certain amount of money to buy your new home and the cost exceeds your expectation. It happens in two scenarios – either you have opted for an expensive house or you have underestimated the cost. A careful observation of the market and contacting multiple construction companies and property builders might help you in deciding the right cost for buying a home.
Whether it is house construction cost or buying a ready-to-move-in home, in both the cases you have to stay alert and think wisely before taking the final call. Beware of the loan sharks in the market. They are capable of breaking your finances with a bad deal, especially when you are desperately trying to finalize a house for your family.
Following are the points that will help you realize how much is too much, while buying a house:
Home buying is not a child’s play and you have literally saved each and every penny to get that dream house, right? It is not always possible to have the entire amount ready at hand. Sometimes you need to take home loans to pay the sellers. Before taking a loan, do proper research and ask family and friends for suggestion. It is advised that the house payments (EMIs) should not cost you more than approximately 30 per cent of your monthly income. Any cost more than that would mean that your house construction cost is way too much and may disrupt your daily expenditure.
In India, the current rate of interest for home loan varies from 9.30 per cent to 16 per cent along with additional processing fees and service taxes, depending on the lending bank or the home-loan financing institute.
Before you are ready to make the purchase or start home shopping, make sure to get stable pre-approval, earnest money ready to go, proof of funds and a home inspector (a professional who knows well enough about a new or existing property) to assist you, in case you find any interesting deals. Being an experienced person, the inspector would help you understand the right value of the house as well as the right time to make the purchase. He can see through the interiors and accessories that hide the core of the house and quote a better amount, helping you save some money. Check for festival offers as well when they give some discounts to the home buyers.
It is important to keep the house construction costs transparent, whether you are buying the house or hiring a builder to construct it for you. The terms and conditions of the contract should be fair enough for you as a buyer. It should include inspection time, closing dates, time of visit as well as the cost of the house.
Master the art of negotiating; it would make you save a lot while making a home purchase. Make sure that you observe everything keenly with the house inspector and note down the flaws. While negotiating the price, tell the seller that “these are the flaws for which you won’t pay more than what you are offering.”The key point is, be firm on the points you are stressing on to crack the deal for a lower price. Put the details in a cover letter and make the offer; it will be a proof that you are being true on your part and this way you can prevent future dispute or disagreements. Give the seller a timeline and you too decide at the earliest to buy it or move on to the next project.