Buying a new home is never an easy decision as it may sound. Firstly, to pick your dream home from the ample choices in the market is a rather daunting process. And even if you may find a suitable home that responds to your taste, aligning your finances around it is another herculean task.
Your credit scores, down payments, loan limit and availability – all are crucial to the financing of one of your life’s biggest purchases. Read below on how you can successfully plan your home purchase.
Step 1: Set an affordability bracket
Set your expenditure bracket straight and right. But before that ensure now is the appropriate time for you to invest in a home. Because your home investment will easily last you for next 20-40 years depending on your loan arrangement. It’s a long term pay off, so having a foresight on your financial stability for the years to come is a good head start. This analysis will also help you understand how much of a mortgage is ideally good for you and if you should spend any of your savings on your home purchase.
Next, have a fair estimate in mind of how much you are willing to actually spend on your home purchase. We may aspire for something but we may sustain something else. It’s wise to keep the monthly housing payments below 30% of your gross income every month.
Step 2: Prepare your loan application
It definitely is not a desirable situation if you finally find your dream home but your loan application doesn’t make you eligible for it. That would be a give heartbreak. Your mortgage papers need to be equally strong as your desire to own your dream home.
The first step to a good loan application is a good credit score. So be ready to clear any unpaid dues that you may have. Bring your credit score to a good standing with professional help. Restructuring your credit score may take up to 6 months. Plus, set your necessary documents straight. With some professional help, you can have a strong documentation in place beforehand.
Simultaneously, evaluate your savings. See how much of savings you can expend into down payments or additional payments. Also, your savings can be tactfully used in between your loan journey to pay off EMIs at regular intervals.
Step 3: New decor for new home
Chances are low that you may take your old furniture to your new home. When applying for a mortgage, you may also have to smartly apply for some extra cash to be invested in your new home’s decor. Be it furniture, fixtures, tiling or POP adornments to your interiors or even installing some art pieces, you certainly would like to decorate your new home with a new decor that reflects your persona.
It certainly is an exciting time now to invest in a home. And as beautiful as the home buying journey may be, it sure is filled with some obstacles. Be sure to overcome them in time and expect a smooth journey ahead.