Tuesday, August 23, 2011

Looking for your budgeted dream home? Search ends here

Published on Mon, Aug 22, 2011 at 18:24 |  Source : Moneycontrol.com

The RBI has hiked its repo rate in an effort to contain inflation, for the 11th time since March 2010 and still inflation worries continue to haunt the common man currently.

One must be feeling the pinch of inflation with costs rising even with basic necessities of everyday living. In such a scenario if you have been saving all your life for a home and now find costs are too high to afford one, you may have to wear your thinking cap and mull over this again. Is this really the case or can you explore some more avenues to see if you can still make the dream of a budget home come true?
The key is landing a good deal. Now, how do you go about this? Here are a few tips. If in spite of exploring these you still want to wait, you should ofcourse do so this will help you save more money towards your down payment, in case you intend to procure a loan helping you save on interest outgo, or wade through aspects related to home loan eligibility.

Suresh, a commerce graduate working as an accountant for the past five years says that the IT boom and double income families has left people like him far behind in the race of life. Buying a home is not even a dream. To his surprise he discovered there are affordable homes for people in his state too! It just takes caution and research to land a home of your dreams. It is a difficult but not an impossible task.
Suresh's real estate agent has advised him to follow these guidelines:

Second hand homes: Suresh's agent showed him second hand or even older properties. The rates of these properties were considerably lesser than new construction properties. Hence, Suresh could get a greater square feet area for his budget or get the same square feet area he wants for a lower cost. Suresh's real estate agent promised to strike a good bargain for him. The idea is to look for a seller who is in urgent need of money or who wants to sell off the property at the earliest. Such a seller is more likely to bargain on the price and sell off the home at reasonable price, even below the marker quote. The flipside to this is ofcourse that if you plan to fund the home with a loan and not your own saved sources, you need to factor in a lot more than 20% of the down payment, as is the usual norm with home buyers. The reason for this - the down payment will increase proportionately with the age of the property.

Look for homes outside the main city: Suresh was looking for an apartment in a good neighborhood, which would have a small commute from work and also is in close proximity to his parents home. Hence he had not considered the option of apartments located outside the locality that he grew up in. Thanks to the advice from his agent he decided to broaden his area of search. The price range of apartments situated on the outskirts of the city is more within his range. Also, since it is not very far away from the city, his daily commute will not pose a problem. His agent also told Suresh that the added advantage of purchasing a property in the outskirts of the city is that they make good capital investments as they have greater potential to appreciate in value than properties located in the saturated markets within the city. Also, people avoid outskirts because of lack of facilities like grocery, restaurants etc. Nowadays that is also not a problem since these amenities become available as soon as an area gets populated.

Find a good bargain: Suresh's real estate agent informed him that a property under construction will cost him lesser than an apartment that is ready for him to move in. So, he encouraged Suresh to consider purchasing a home under construction by the builder. This is because Suresh is not in an urgent need to move into a new home. If he purchases an apartment even before the construction begins or is in its early stages, Suresh will get a better rate. However, he carries the risk of the construction not turning out to be exactly how he perceived it. Also, it is advisable to go with reputed property developers here. On the flipside, even reputed builders can sometimes become unpredictable when it comes to delivering completed properties on time, hence discuss with your legal counsel on the best measures to take regarding such an event. If talks with the builder are not fruitful, the only course of action sometimes is the legal route, which again comes with its own hassles and can take a long time to reach a conclusion. As far as possible be vigilant when you acquire your property from the start to the finish and have your legal counsel prepare you for unfortunate eventualities every step of the way. Else unpleasant surprises may jump at you on a later date!

Purchase property not in the best condition: The agent also suggested that Suresh could try the option of purchasing property that is not in a good shape as such properties are generally available at low costs. Suresh can then renovate the property to look the way he wants it to look. Generally, the overall cost should be less than the cost of buying a new property that is in a good condition. Hunting for a property that is not in the best condition can be very challenging. You need to rely on an expert who is able to guage the true worth of the property. The level of damage is critical and you need to factor in renovation costs for the property too before you take a call. Also, the bank will decide if they will be able to offer a loan for such properties only if it meets the bank's property evaluation norms.

Search for properties auctioned by banks: Banks generally auction properties that they have claimed from loan takers who have been unable to repay their dues. Such properties are sold at a distress value, which is around 15-20% lower than the market value. The information on such auctions are usually published in popular dailies as well as websites like http://www.foreclosureindia.com/. This is also a good bet to find a property at a bargain price. BankBazaar.com is an online marketplace where you can instantly get the lowest loan rates , compare and apply online for your personal loan , home loan , car loan and credit card from India's leading banks and NBFCs.

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