So, you want to buy a house, eh? Let’s talk about this, since it’s going to the biggest and the most serious commitment you can ever take or are possibly gonna take.
Lets starts with the good old method of getting down to brass tacks “and relax”…
Why do you want to buy a house? What plans do you have with it?
Well, the reason I am asking you this is because unless you have any idea about what kind of food you like, you cannot order any food, eh?
Mind the location, check the future municipal plans and stick to your budget at all costs. That’s what this blog explains.
That was the easiest and simplest comparison I can draw to, but the logic remains the same. Here’s our house buying guide:
Things to consider BEFORE buying a house:
Now let me tell you the things you need to consider BEFORE buying a house:
I cannot stress enough on this point. You need to be mindful about which area, neighborhood you choose as your home. If you are planning to start a family, are there good schools nearby or not. How long does it take for you to commute to office? How close is the gas station? Do you have any specific preferences, like, having a MacDonald nearby your place?
Also, keep a watch out for what are the crime rates in that locality. If there are high crime rates, try to figure out how much will it cost to have a strong security system in place, and if you are going to rent it out, how much monthly influx of bills will cover up all the expenses.
And so on and so forth.
Look at your income. Figure out if you can pay the monthly premiums and often times than not, can you try to give a little bot more than just the minimum payments?
Be realistic about your income, budget and the monthly installments you can afford.
3. Credit score
A healthy credit score is necessary so that
Think of credit scores as those report cards you get at the end of each semester in school. The report card shows how trustworthy you are when it comes to money.
To build a credit score, you need to have a credit card and use it. That’s the most important thing. I know people who take credit cards and never use them. That actually hurts your credit score.
So, what happens when you have a healthy credit score?
The banks then feel comfortable giving you a loan and charges a comparably lower interest rate in return. They may even give a higher amount sometimes.
4. Stick to your budget
When you decide to buy a new house, the planning and search starts months or even years ago. That’s because lands and houses are not cheap to come by and having a budget can help you a lot. There will be times when you feel like there are so many houses or plots available for a much cheaper rate than you anticipated, but wait.
Remember what I said about location? You must combine the importance of location and sticking to your budget. There will be times when you will feel like "Ohhh if only had $50k more, I could buy that house which has a nice garden acting as eye candy."
Don’t. Even. Talk. About. It.
What no one thinks about is that when you have a slightly larger house, your housing spend will increase slightly more, and then when you add all of it up, you realize that you probably spent $3000 annually more for just paying and maintaining those utilities.
And the gardening eye candy as well.
5. Future plans
By future plans, I mean what are you gonna do with the house immediately? Are you gonna use it as a rental property or as an investment? If you are gonna use it as a rental property, what are the major categories of tenants you are gonna avoid- for example, you want to make sure that your house stays clean and the furniture inside without any damage.
So, decide upon your rules and rent carefully, and if possible, use the concept of house hacking.
What happens in house hacking?
Basically, you buy a house with more bedrooms for more than one person to live, you occupy one of them and make the rest of your tenants pay the bills. You often get an extra amount left monthly and you can use it for paying off your mortgages.
Things to look for when you are buying a house:
Now that you have decided the future of your house and its occupants, it’s time to tell you the things you must look for when you are house shopping.
A no brainer, I am sure. See the surrounding areas. Is it clean? Does it look like you can stay here for the rest of your life? Is there greenery around? How far is it from all the groceries and essential stores? How far from the main road? What are the noise levels? Is there water nearby? What about factories?
And so on and so forth.
While you may like to have a messy bed and a messy bun is your choice of pajama lifestyle, you do have to be exceptionally strict when it comes to cleanliness in house shopping. Take deep breaths at every nook and corner of the house, and see if you spy mold nearby. Tap and knock at different areas of wood boards and roof tops too and see if its hollow from within. How clean are the bathrooms? And how big is the kitchen? Can you picture where you will be putting your things and how will it look?
Cleanliness is a major thing here because when you apply for a mortgage, the home appraiser comes and sees how much worth is your dream house really worth. And cleanliness and the surrounding areas matter a lot to them. They are indifferent to home decor and fluff. They look at the basic amenities and the livability environment.
3. Check future municipal plans
The main reason why location is so vital in real estate is because you can change every aspect of your home, except the location. Once you pick a place, you picked it for life. However, a location also changes its appeal from time to time. A location which is highly desirable for families may not be desirable after 10 years. Maybe a natural disaster happened and the house rates dropped at devastating rates.
Same thing happens for undesirable places. Let’s say there is a slum area. The simple rule of thumb is if the locality is dirty, you’ll get land and house rates as dirt cheap. And everybody calls you a mad man for buying that location.
But you have checked with the future municipal plans the government has in store for the area. Turns out that within 15 years, the slums will be eradicated to reveal a new hospital built for old age and homeless people. And if you have bought that plot of land or house as a retirement plan, well, you have picked a really good place!
And if there’s hospitals, means little departmental and grocery shops will slowly erupt out soon. Making the area more inhabitable for doctors, nurses, senior citizens, middle aged adults to live it.
If you have water source nearby, then check how much water can reasonably expected on an extremely rainy day. Are there hills nearby? Are you on the downhill or uphill area? Will your front door be lined up with water when you step out on a rainy day? What is the quality of the soil? Is it construction-worthy soil?
A relatively minor point to keep in mind, but look out for windows. See if you have properly ventilated spaces inside your home. Which direction is the window facing? Will you be able to bring in sunlight when you open those windows? Natural sunlight is great for lighting and sanitizing purposes as well. But then again, natural sunlight is priceless.
Yup. These are pretty much the things you need to keep in mind before you buy your first home, so be careful and gather as much information as you can about your dream house and think twice, thrice and maybe four times too before you spend a lifetime paying it off.