Tips for First Time Home Buyers

Making your first real estate purchase is daunting. It is even scarier when one is looking to buy a new home. Buyers have plenty of questions that cross their minds; how much can i afford, how to buy a home, what to look for when buying a house and many more. Not only are there many arenas to cover, but it is also an emotionally draining endeavor for a first-time homebuyer - confused between wants and needs.

Let's start with asking the right questions and things to look for when buying a house. Graana.com brings you some points to ponder when embarking on this journey.

Purpose

What is the motivation for buying the house? Do I want to move in? Do I want to earn money from rental income? Do I consider it just another real estate investment? Why exactly am I buying a home for the first time? Asking these questions will help you make wise decisions because it will clarify how much and where you would like to buy a house.

Budget

How much money do I have? How much loan can I afford? How are my finances looking? It is essential to consider this aspect before jumping into buying first home. For most people, finances are limited, and financing is not an option. Like every other important decision in life, real estate decisions also follow a similar pattern. You can purchase a bigger house, or you can opt for a better location. Budgeting is an essential tip that a home owner can undertake before jumping into the investment part. It will give you a sense of the money you can pool in towards purchasing that property. If you are going towards house financing, you can make an executable plan for the future.

Risk

Different people have varying degrees of risk tolerance. Some are inclined to take more risks, while others like to play it safe. It depends on personal preferences. Usually, risky investments give greater returns if they prove successful, while low-risk investments give modern returns. Age also plays a massive role in this aspect. Aged people are more risk-averse, less likely to invest in long term projects, while young enthusiasts can afford to wait for long term investments. When one analyzes the level of risk one is willing to take, it opens doors to the types of projects they want to invest in.

Timeline

What is the timeline for your home purchase? Do you want returns in 1 year? 5 years? Or 10 years? In simple words, how much longer are you willing to wait to benefit from your investment. Then again, the purpose of your investment is taken into consideration. If you have purchased the house for your personal use, you’d be slightly less keen to view the property’s appreciation than someone who purchased the home for purely monetary gains.

Liquidity

How quickly do you want your property to be sold to give you monetary benefit? This determines how liquid that investment is. Properties in some locations are more fluid than others. For example, in Pakistan, property in an established DHA is more likely to be liquid than in some remote areas. Development, perception and accessibility are critical determining factors for this. It is simply the case of demand and supply. The demand for houses in such areas is more which means that they will sell faster when needed.

Reliability

If you have found the home of your dreams and it ticks all the boxes, conduct quick research to see if it is a safe investment. Graana.com has devised a simple formula for this: ‘OADD’ - O stands for ownership, A stands for approvals, and D stands for demand and delivery. These are some of the things to consider when buying a house. The house should be in a location that is verified and approved by authorities with all legal documentation cleared. Moreover, the process should not be cumbersome, and the buying and selling of it are smooth with the property and location having a reliable reputation with authorities. If these aspects are covered, the investment is most likely to be a successful one!

Diversification

Lastly, the tips for first time home buyers are the same for any other investment. Once you’ve purchased your first house, try diversifying your portfolio with your next investment. It is not wise to put all your eggs in one basket. The overall risk is minimized by investing in differing projects and the chances of a meaningful investment increase. These are some tips, advice and points to ponder when investing in your first home.

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