Preparing to Buy a House? Follow These Steps

Buying a house is arguably one of the most significant milestones in life. For many, it represents stability, achievement, and personal progress. However, the journey from dreaming about owning a home to holding the keys can be fraught with challenges and complexities—especially financial planning. 

Here, we are going to discuss crucial steps involved in preparing to buy a house, focusing on practical aspects like financial planning and ensuring you're ready for the big step.

Researching Properties

The initial step is always thorough research. Consider the following criteria:

• Location: Proximity to essentials like markets, schools, and hospitals.
• Safety: Low crime rates and secure surroundings.
• Budget: Align properties with your financial status.

Example Scenarios:

1. For Families: A couple might prioritize educational institutions for their children.

2. For Bachelor: A bachelor might opt for a smaller studio near workspaces.

Sample Calculation

Suppose your budget is ₹50 lakh:

• 20% down payment = ₹10 lakh
• 80% loan = ₹40 lakh. 

This calculation helps determine affordability before property hunting.

Legal Due Diligence

Understanding the legal intricacies when preparing to buy house is pivotal:

• Verify the seller's ownership.
• Ensure no pending legal disputes on the property.

Legal due diligence should include the following:

a) Title Verification: This involves thoroughly checking the property's ownership history. It is essential to verify that the present property seller has a clear and marketable title. This may require examining property records going back several decades.

b) Encumbrances Check: Look for existing mortgages, liens, or other claims against the property. These could affect the new owner's rights or result in unexpected financial obligations.

c) Zoning Laws and Land Use Regulations: Verify that the property's current use complies with local zoning laws. This is particularly important if you plan to renovate or change the property's use.

d) Building Permits and Approvals: Ensure all necessary permits were obtained for construction or major renovations. Unpermitted work can lead to legal issues or costly corrections later.

e) Property Tax Status: Check if all property taxes are up to date. Outstanding taxes could become the new owner's responsibility.

f) Easements and Rights of Way: Identify any easements or rights of way that might affect the property's use or value.

g) Pending Legal Disputes: Check for any ongoing legal issues involving the property or its current owner that could affect the sale or future ownership.

h) Environmental Issues: Look into potential environmental liabilities, especially for properties that may have housed industrial or commercial activities.

i) Homeowners Association (HOA) Documents: If applicable, review all HOA documents, including bylaws, financial statements, and pending special assessments.

It is highly recommended that you engage a qualified real estate attorney to conduct this due diligence. They can provide a comprehensive title report and help interpret complex legal documents.

Financial Planning for Home Buying

A crucial aspect of preparing to buy house is organising your finances:

1. Budgeting:

• Income vs Expenses: Ensure you have enough savings for a down payment without disrupting your lifestyle. 

2. Loan Application:

•     Compare interest rates from different banks.
•     Opt for pre-approved loans to hasten the purchase process when you find the right property.

Table: Loan Comparison

Using such tables helps compare options transparently.

Finalising Your Purchase

After selecting a property and arranging finances:

1. Receive an allotment letter or sale agreement as proof of booking.

2. Register the property in your name, which officially transfers ownership.