Buying home for the first time? Guide to it

 

Today, I am excited to share with you the first time home buyers step by step guide, whether you are a first time home buyer or you have not purchased a house in a while, or the last time you bought a house it just wasn’t a very smooth process, you are in the right place.

Let’s break down from beginning to end exactly how the home buying process works. We will break it down into four parts.

a)      Applying for a mortgage – You have got to have a partner in the process if you are going to buy a house.

b)      Making an offer – Engaging with the seller

c)       Closing – The period of time where you actually purchase the house

d)      Break the loan payment down into parts

Your loan payments obviously are going to be with you for a while. This write up is going to help you if you are absolutely clueless and just know that it’s a good idea to purchase a house and simplify the process of buying. So let’s get started.

You might think that the very beginning is going out and looking for houses. May be you are driving around town looking for houses now. You know that it is fine but the real beginning of the process is knowing whether you can buy a house at all! You may have got the money to purchase the house and if you do this part is not as important for you but for the majority of people does not have finances right there to pay for the house. So you are going to need a financial partner, someone to invest it in this house with you and banks that provide home loans are the ones that are generally going to do that for you.

So the step one in the process of buying a new home is applying for loan. You are going to apply for a loan so that you know what you have available and what kind of house you can purchase. Generally, you will get pre-approved loans to borrow a certain amount of money. But one thing to remember is that pre approval is not 100% sure but a financial institutions way of saying that it looks to us at this point that you could borrow this amount of money. Later on in the process they are going to consider if any job scenario changes that have happened and preapproval is unlikely to go through.

Now the second step is once the loan is preapproved, it is time to truly go house shopping! Now you have a sense of how much money you can borrow, how much money banks are willing to invest in your new home. Once your dream home is found, you are going to make an agreement with the seller on some last minute renovations to be made before owning it. One needs to look at house insurance as well as part of the agreement.

The third step is making the agreement official and agree on the contingencies mentioned by the buyer and seller agrees or makes a counter and both the parties go through and agree on the same and the purchase of house happens. So now you have purchased the house and you are ready to move into house that will provide you tons of joy, maybe grow your family etc. whatever your future interests are in life.

The final step is to break down your equated monthly installments. There are 2 parts to it and that is principle and interest. The principle is the part of your monthly EMI that goes towards paying down your debt. You borrowed 25 lakhs and every month you are paying a little bit to pay that down in 15 or 30 years as per the agreement with your bank. Principle is not the main part of your payment. It depends on how your loan is set up but often times at the beginning of the loan, the main part is actually interest. Interest is part of your monthly payment that goes toward paying the bank for the privilege of borrowing their money. As you know, banks don’t do this for free.

Alright, what we learned: we applied for a loan, we navigated all the different parts of the home buying process. Now you understand how these things work, exactly as to how buying a house works from beginning to end.