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10 Mistakes Every First Time Home Buyer Should be wary of

Updated on: 14 Dec 2021 // 24 min read // Home Loans
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Buying your dream home is a challenge at any given point of time, especially in a complex real estate market like India. A prospective homeowner should be extremely careful while Applying for a Home Loan and also while looking at multiple properties before zeroing in on his dream home. If you are a first time home buyer, then it becomes especially critical for you to be vigilant of many complexities that might be inherent to the home buying process.

Here are the 10 mistakes every first time home buyer should avoid:

1. Making an improper Estimate:

Never end up overestimating the budget that you will be spending on buying your first house. It is very easy to give in to the temptation of an extra bedroom room or that beautiful balcony, but you will end up disappointed when you finally make a move on the property. Make sure you don’t end up wasting your time by looking into properties you are not going to buy, and the prospective homes are well within your financial limits.

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2. To use up all of your Savings:

Many times, it’s the case that a first-time buyer is moving into a second-hand home or an unfurnished accommodation. In such situations moving costs, emergency fittings, interior furnishing costs, plumbing costs might pile up and hence should be accounted for. It subsequently becomes imperative that a certain part of your savings shouldn’t be touched, even after completing the down payment; the buyer should have a considerable reserve as an ace up his sleeves to meet any unexpected exigencies.

3. Incorrect Sizing of the down payments:

Different properties are going to have variable amounts of down payments that the first time buyer will need to pay up front. Sometimes when the buyer decides on paying the minimal amount, it shall benefit them in the short term but will feel more like a burden in the long run. It is always advisable that you cough up a little more while making the down payments and wait a bit longer to purchase your dream home.

4. Not Research/Evaluate the lenders:

Home Loans are these days disbursed by almost all the major banks, and hence you should not stop at evaluating just one or only a handful of options. You should carefully consider all the offers and look for the best possible lender which will offer you considerable benefits over the others which will result in the most useful deal. At any given of point during your loan evaluation period, you should have at least six quotes on the table.

5. Not keeping a tab of your CIBIL/Credit Score:

Whenever you apply for a Home Loan, you are going to be thoroughly scrutinised by the lender. They will go through your credit report to ascertain your capability of paying the loan amount back. Hence you should keep your CIBIL score under check by repaying your equated monthly instalments (EMIs) on time, as the refusal of your Home Loan by the bank could result in the rejection of your loan application by other banks and will subsequently impact the ownership of your dream home by further delaying it.

6. Take new loans/credits before finalisation:

In case you are planning on buying your favourite new car and your dream home simultaneously, think twice. While closing the deal, the lender sill without any doubt have a look at your credit/ CIBIL score one last time, and in that scenario, if you have applied for a new credit card or another loan, it will show a drop in your ratings and could cause issues in finalising the deal. So it is advisable to hold on to your dream car or that credit card for a while longer.

7. Not availing the services of an agent:

Whether you want to believe or not, but real estate in India is still a largely agent-driven market. In return for a certain amount in commissions, the agent will show you around and assist you during your exploratory phase. He will thoroughly guide you through the intricacies of buying your dream home. Make sure you are a bit cautious if the agent is aligned with the seller and try that it’s the other way around.

8. Making large deposits or withdrawals abruptly:

In case the Home Loan lender observes a large sum of money coming in or going out of your bank accounts which is unaccounted for or is done without any legitimate documentation, they might hesitate or even reject your Home Loan.

9. Changing too many jobs too soon:

In case the buyer is changing too many jobs too soon, then it becomes a cause of concern for the lenders as it shows the lack of stability in the inflow of fund to the buyer’s account every month that can impact the repayments. Hence make sure you stick to one job for at least three to five years at the time of buying your home.

10. Skipping Home Inspections:

Though very rarely but still, many prospective home buyers blindly believe the real estate agent or their relatives before purchasing their house. They look at the pictures at popular websites and get duped into taking a house with unstated inaccuracies, exposing them to a variety of problems such as plumbing issues, wiring problems etcetera. An inspection of your prospective buy should be carried out without failing to avoid falling into traps as mentioned above.

Buying your dream home can be a tricky phenomenon and more or less if the issues mentioned above are taken care of by the prospective buyer, they are less likely to face any problems with their brand new home. These preventive actions and precautions would make your house hunting a cake walk.

Also Read: Things to Know Before You Raise Your First Home Loan

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