Getting set
Tuesday, January 30th, 2007
Typically, the process of buying a home involves a long term commitment. There are several things you need to decide upon and do, before going ahead.
- Be sure you’re staying put. While a home is an investment, and can be sold to recover your equity, it isn’t a quick or painless process. Furthermore, there are transaction costs involved - agents fees, title charges, loan termination etc.
If you anticipate moving around, or needing a larger home in the near future, it doesn’t make sense to buy. - Clean up your credit record. It’s possible to drop your interest rates by upto a couple of percent, if your credit score is good. While you may not be able to close off all debt, you can clean up some part of it; plus, make sure all bills are paid on time. Get a copy of your credit report and check that there are no adverse remarks.
- Aim for an affordable house. As we remarked earlier, a good thumbrule is to look at two and a half times your annual income; but use a mortgage calculator to estimate what you can afford.
- Schools and other amenities trump good looks any day. You can renovate a run-down property, but you can’t change the school’s reputation or other local facilities. A cardinal rule in real estate is that it’s all about location.
- Get pre approved for a loan. You’ll be surprised at how it strengthens your bargaining power.
- Offer low, and bargain up. Many sellers will negotiate on the starting price, but you don’t know how much. Plus, if he wants a quick sale, he may compromise a lot more than you think he will.
- Get professional help. A good realtor and a home inspector are a must. You’ll save a lot more than you’ll pay them.
A home is where you want to feel happy, everyday that you live there. Don’t skimp on the process.
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