Every person who has recently started their career has a romantic goal of owning their dream home. It gives them the enormous satisfaction of doing something important in their lives. As a result, everybody is devoting a significant portion of their savings to purchasing a dream house. The aim of a dream home is to provide not only a comfortable place to live but also an asset for the next generation. We are devoting the bulk of our life savings to purchasing a home in order to live a happy and comfortable life.
Is it true that we are living happily now that we have purchased our dream home? I am certain that living in our own home rather than a rented home would provide us with some degree of comfort. However, due to a lack of proper financial planning, there will be some difficulties after purchasing a home.
Prepare the Downpayment
The first and most important goal of the dream home is to save enough money for the down payment. According to legal requirements, a deposit of 25% of the property’s value is usually needed. To minimise the loan size, it is best to raise the down payment as much as possible. The interest rate and maturity period would be longer if the loan sum is larger. One way is to assess affordability based on the 3-3-5 rule. Paying the down payment with a loan from friends and family, or by pledging other assets and other unorganised loans, would put you in a bind. To satisfy the down payment requirement, we’ll need 20 to 30 percent of the property’s value in personal funds. If your financial situation is not ready, then now is not the time to purchase a home.
Find a Property That Suits Your Budget
According to recent statistics, the majority of buyers find their home online or via a real estate agent. You’ll have a better chance of succeeding if you do both! Find homes you want on the internet and send the listings to your real estate agent so they know what you’re looking for. Then they can use various listing sites to find homes in your preferred areas that meet your requirements. Real estate professionals develop, monitor, and pay for listings, which will greatly assist first-time home buyers like you in viewing the biggest pool of available properties for sale in the marketplace. Real estate agents will also help you find great offers on homes as soon as they’re listed, or even before they’re listed. They are also able to help you sell your property to facilitate your next purchase.
Explore Neighbourhoods for the Best Fit
When you’ve found some homes for sale within your budget, don’t make a decision solely on the basis of the house. Home buyers, according to polls, are more likely to compromise on a home’s existing condition and floor area than on the neighbourhood’s quality or distance from a school. As a result, make sure to consider the nature of the neighbourhood and its position when making your decision.
Inquire with your real estate agent about public transit and the standard of schools in the areas you’re considering. Make a rough estimate of the new commuting times to see if they’re feasible. Check out the neighbourhood at various times and days to see how traffic and noise levels are. Only live in a neighbourhood that you and your family enjoy.
Factor Renovation Costs
When we embark on a major transaction such as purchasing a dream house, we will always focus on the largest portion of the cash outflow, which will be used exclusively for the property acquisition transaction. We must understand our post-purchase cash flow requirements in order to set up our dream home according to our preferences and lifestyle, such has hiring a renovation contractor to refurbish the unit. Getting a loan to do interior work or to buy furniture and other household items would exacerbate our liquidity crisis, and purchasing household items with consumer loans would raise the debt outflow. The interest on the loans would be greater than 15% of the total amount borrowed. It would eat up the rest of your earnings. As a result, plan for both pre- and post-purchase expenditures. Then purchasing your dream home would be a truly unforgettable experience for you.
Make a Reasonable Offer
Assume you’ve found a home you want that is within your budget. You’re about to make an offer because you’ve already been preapproved for a loan. It can be difficult to know how much to sell if you’re a first-time home buyer. That’s when you can rely on your real estate agent’s knowledge. Request that your agent assist you in ensuring that your bid is not only affordable, but also fits within your budget and the home’s value. Make sure not to make an impulsive, higher-than-you-can-afford bid just to get ahead of the competition.
Protect Your Property
The majority of us are unable to defend ourselves by purchasing sufficient insurance coverage. Failure to obtain sufficient life insurance for the mortgagee could cause problems for family members in maintaining the property in the event of the house owner’s tragic death. If the house owner dies before the housing loan is paid off, the bank will hold an auction to recoup the unpaid loan sum. If the home owner had sufficient insurance coverage, the insurance claim sum would aid in the property’s retention without difficulty.
It is more necessary to protect existing assets than to create new ones. We are eager to build new assets and place less emphasis on safeguarding existing assets. You will agree if you consider the number of properties in the market that have insurance policies to shield them from natural disasters. Failure to obtain insurance coverage to protect the dream home from natural disasters that would land the home owner in a bind. It can happen infrequently, but if it does, it will have a negative impact on our whole way of life. If you remember, most of the home buyers you meet have faced one or more of the above challenges on their search for a dream home. When you’re ready to buy your dream house, I hope this article will help you avoid these blunders.