Step-By-Step Guide to Financing Your Dream Home

Buying a home is one of the biggest financial decisions. To make a smart and informed decision and crack the perfect deal, it is important that one does good research about the entire buying process and understands the various financing options available. One should know how to calculate what will be in the budget, the loan rules, and regulations and negotiation process, etc. For many, this entire experience of buying a home can be uncharted territory. So here we give an easy step by step guide to finance your dream home without any hassle. 

Step 1-Know the credit score: The first thing you should do is to figure out your credit score as that will help you understand the kind of loan you can avail and the interest rates that you can get the loan at. Knowing the credit score will also help in figuring out if there are any potential errors that need to be corrected in the loan history. It is important to know that if the credit score is low, the banks offer loans at a high-interest rate. So ultimately your credit score will give you a rough idea of the home you will be able to buy. 

 Step 2-Evaluate your financial situation: It is important that you calculate what kind of house you can afford keeping in mind your income, monthly payments, and availability of funds. Experts determine affordability in a simple way, the monthly expenses should not be more than 35 per cent of the gross monthly income and the mortgage payment should also be less than 28 per cent of the monthly income. Nowadays, there are easy to use calculators that help in determining affordability. They are very helpful in calculating what you can afford, whether it is a 4 BHK apartment in Ahmedabad or a 1 BHK flat in Mumbai.  

Step 3- Make funds for the down payment: Whether you are planning to buy an apartment in Delhi or are interested in a 2 BHK flat in Ahmedabad for sale, you must make sure that you have enough savings for the down payment. This is important as it will determine your overall housing cost as well as the mortgage. It is best to give at least 20 per cent as the down payment as that will help you get the lowest rate possible. You can do savings for the down payment by cutting down on the daily expenditures like shopping and eating out. Remember that it will all be worthwhile in the long run as you will finally have a dream home that you can call your own. 

Once this is done, finalize the financing by choosing a reputed financial institute that you trust and close the deal with the lender.  

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Created on Dec 28th 2020 00:02. Viewed 397 times.

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