Buying a “Dream Home” has become one of those life goals that almost everyone has on their to-do list. Whether you like a sophisticated urban apartment or a spacious home with a small yard, we all want a home that seems like it was built just for us.
Factors to be considered before buying your dream house
- Budgeting
A good way to start planning for your dream house is by budgeting. Talk to your partner or family, and understand the financial situation for the next 6 months. Proper understanding of the current financial situation, expenses, and income helps you make a decision.
Include a realistic income-debit ratio as it gives a clear picture of how much you can spend on your housing. It is always better to mark the maximum estimate for buying, as it ends up inside the budget not beyond.
- Monitoring closing costs
The legal papers for proceeding with a sale involve private or government agencies, so keeping an eye on these costs is important. It is always advisable to connect with a real estate expert or financial planner to understand and prepare for those costs.
- Real estate market in the location
The location where you want your dream house to be is also one of the important factors to be considered. The land, location, and its development for the next 5 years impact the pricing. You should also consider the real-estate market and the property resale value estimate.
Understand the real estate market in the desired location for a few years and predict the market value before buying. Stay updated and don’t end up buying beyond your budget.
- Risk and time management
To fulfill your dream there is no better time than now. Understand the right time to buy a property. As there are some uncertainties in the market, job risk, health emergencies and other market factors should be considered.
For example: In this covid crisis the input costs like cement, steel, brick etc., are reaching the maximum due to inflation. All these factors count in decision-making.
- Existing loans/Debits
Paying off existing loans (such as a vehicle loan or a personal loan) is advisable before buying a home/taking a home loan. By paying off these unsecured debts, you will raise your CIBIL score, which will help you qualify for a home loan.
- Emergency funds
Life is unpredictable, and no one can plan for unforeseen expenses such as medical bills, family functions, job loss, and so on. Financial planning isn’t complete unless you have enough money in your emergency savings to cover six months of living expenses.
Leveraging finances:
What is leverage?
Leverage is a debit taken to manage an investment or a project. For example, if you want to buy a house and you’re using your own money to leverage your buying. Mostly, with a 20% down payment, you get 100% of the property, So here 80% is leverage.
People and businesses utilize leverage to increase the possibility for returns while also increasing the downside of any risks involved if things don’t work out.
Risks involved in leveraging finances:
- By taking high leverage, you end up paying a huge amount. Timely payment helps in interests.
- With unpredictable life, many ends up in losses just because they forget cash flow is important and a good plan and disciple help you.
- Beware of terms and conditions while accepting a leverage
- Decide the type of leverage that helps you in the current situation. Choose wisely
Owning a home is a dream come true. Real estate investment is often regarded as one of the greatest ways to invest. Leveraged investing, on the other hand, can be a risky. You can avoid these dangers by learning how to invest and planning your finances.
Looking for a Certified Financial advisor in Hyderabad, We are a SEBI Certified investment advisory company that can help you with all real estate and leveraging related advice, get in touch with us over here – www.vbsinvestments.com/contact/