Financial Tips for First Time Home Buyers

Housing inventories are high and mortgage rates are low, even so, it’s as easy as ever to overestimate how much house you can afford and underestimate how much it’ll cost you. Following are a few tips for making your home purchase as cost effective as possible:

1.       Own or Rent?

Owning a home is expensive. In addition to the down payment and mortgage, you’ll have to pay for closings costs, insurance and maintenance. To figure out whether it’s financially smarter to buy or rent in your area, calculate and compare total home ownership costs to rental rates.

2.       Consider Monthly Costs

Even if you can scrounge up a down payment, figure out before buying a home whether you can comfortably cover the full costs of ownership–including the mortgage, taxes, insurance and regular fix-up costs.

3.       Obtain all the knowledge about Govn. Tax Policies for First Time Home Buyer

Government of India encourages purchase of house for those families who dont have single house of their own as a result of which Govn keep introducing various tax deduction and exception policies in Income Tax for the First Time Home Buyers. So, please before going for home purchase, first obtain complete knowledge about various Govn policies, deductions and exceptions. And if there is no policy available, but there are chances that Govn will declare one in the recent upcoming period which will decrease the prices of houses in the market or will provide great amount of deduction in the Income Tax, then wait till the time Govn announces its policy.

4.       Avoid Family-Assistance Tax Traps

Before taking assistance of money from your Mom and Dad for making down payment or full payment of house you are going to purchase, note that outright cash gifts can result in big tax bills. Avoid them by structuring parental assistance as a bona fide loan with minimum interest rates set by the Revenue Services.

5.       Consider High-Deductible Home Insurance

If you’re a do-it-yourself kinda person in case of moving into a new home, consider lowering your home owner insurance premium by raising the deductible. Even if you’re buying an older home, or aren’t too handy, it might not be cost effective to pay a lot in extra premiums to insure against that last dime of potential liability.

6.       Cut Insurance Costs By Upgrading

Security systems, smoke alarms and other upgrades can cut your insurance premiums. It can also pay to insure your home with the same company that covers your car, boat or other property.

Real Estate Investing- A Start Up Guide

There’s no reason amateur real estate investors can’t profit from small, individual property purchases. As home values currently rising 3.9 percent year-over-year, and expected to rise another 2.6 percent over the next year, why not allocate some of your savings toward real estate? To get started off on the right foot, you’ll need to make some decisions. Follow these steps prior to entering the real estate market.

Evaluate your Current Finances

In general, experts advise buyers put down at least 20 percent of a home’s purchase price. But to avoid being responsible for two mortgages, many investors wait until they can pay for real estate outright.

If you do need a mortgage, you might consider living in your investment property to take advantage of owner-occupant rates. You don’t have to live there forever, either. Lenders typically require just one year of residency to lock in the lower rate for the remainder of the mortgage. Owner-occupied interest rates are much more favorable than secondary home or rental property loans.

For those fortunate enough to purchase multiple income properties simultaneously, it’s important to choose the right financing. Experts recommend that an individual can leverage his investment capital using cheap 30-year fixed-rate mortgages and buy as many income-producing properties as possible. This is how you can accelerate your wealth-building with the turnkey properties.

Determine the potential Cash Flow

House flipping (means purchasing a property and then quickly reselling it) can help you make quick profits that look easy. But most homeowners don’t profit when they sell shortly after closing. Of course, extensive renovation on a flipped home increases the potential for short-term profit, but bigger upgrades costs a lot of money. Unless you’re capable or experienced in large-scale home improvements, don’t assume you can flip a house by yourself to benefit immediately.

Renting out the property, on the other hand, is more of a long-term strategy. Pricing requires some serious calculations to attract the largest number of possible tenants, while still covering the mortgage and homeownership costs. Although you’ll aim for profit in the beginning, the real money usually flows in after the mortgage is paid.

Experts suggests that in order to compute your expected cash flows in case you have decided to rent out the house in which you are already living in, add up expenses related to the house like the mortgage you are currently paying for it, insurance premium, tax payments and amount spend on the repair & maintenance of the house annually. Then subtract the figure so calculated from the expected income by renting of House Property and then, if you are left out with some cash in hand, it would be a feasible decision to let out the property, but if the final numbers are close to zero, then you might have to rethink your decision to let out.

Today’s rental market is notoriously expensive, and competition among lessees is high. Even if you’re not looking to be a landlord long-term, it could be financially wise to rent out your unit at least until median sale prices in the region peak.

Choose your Investment Type

Many investors default to considering individual direct ownership as their only way to profit from real estate. However, partnerships (both close and limited) and publicly-traded investment trusts are designed to help investors who might not have the time, or the skills, to run real estate investments on their own. Real estate investment trusts, on the other hand, enable investors to fund multiple projects simultaneously without the hassle of day-to-day management.

Unsurprisingly, your financial capabilities, estimated profit margins and choice of investment are all interconnected. Whether you’re starting out with some Lacs or Crores, staying informed in the real estate industry — even as a passive investor — is a key to success.

Noida: An Emerging Capital

There has been an up lift in the market after the arrival of the new government, especially after the budget has set the ball rolling for real estate sector. With allocation of more funds for affordable housing, easing of FDI norms, implementation of REITs and the special focus on infrastructure development, the government has made it clear that in order to push economic growth, a special focus on infrastructure and real estate development is required. In the foreseeable future, the real estate market in Delhi NCR is going to see considerable forward momentum.

As land is a prerequisite for any kind of development, Noida and Gurgaon are the logical answers to the increasing need for housing in Delhi NCR. In terms of inventory, Noida and Gurgaon have more options than any other city in the NCR. These two areas are consequently expanding and growing and expansion opens opportunities for further growth in real estate. It is for this reason that these two cities have now got mature real estate markets for different sets of buyers and investors. However, they have very individual returns potential. In the last few years, it appears that investments made into properties located in Gurgaon have reaped better returns than those secured from Noida property. Where as, on the other hand, various recent announcements and the infrastructure uplifts of the city have made Noida's real estate market increasingly attractive.

What favours investors entering Noida is the lower pricing factor, which now promises better appreciation and returns on investments. The realty market in Gurgaon has now crystallized into one most favourable for buyers in the premium segment. But the other side of the coin is that the high price points in Gurgaon suggest that properties there will no longer fetch high rates of appreciation.

With the fast-paced development in infrastructure in Noida and its vicinity, real estate growth has really picked up over the past few years. There have been announcements for many new such projects as well, which has had a positive effect on the real estate market.

The proposed extension of the Dwarka-Noida City Center to Pan Chowk wall give direct connectivity to Delhi and other NCR areas, and the project is expected to complete by 2021. The Noida Metro Rail Corporation (NMRC) has got the required approvals for the 29 kilometer-long Noida-Greater Noida Metro link from the state government, as well. Simultaneously, the Greater Noida Industrial Development Authority (GN I DA) has plans to set up its own power plant, which will provide uninterrupted power supply to the region.

Though Noida is known for its affordable housing projects, there are numerous luxury projects under ay as well as in the pipeline in Noida and its adjoining areas. Renowned developers like Supertech Ltd, 3C Company, Prateek Group, Lotus Greens and Wave Infratech have launched super-luxury projects with 3-5 BHK apartments of soon-4000 sq. ft. and priced in the range of Rs i crore to 3 crore for area with good infrasiructure, metro connectivity and good road network, real estate development in the Noida regions is picking up rapidly. This is important, since infrastructure development is the primary draw for buyers and investors into this area Upcoming major projects like the Export Promotion Zones and Taj Economic Zone along the Yamuna Expressway are likely to push the economic development of this region, consequently giving a further boost to real estate development. In fact, the positive response from buyers and investors in Noida has now made this the preferred destination for launching new projects and expediting existing ones. All in all, Noida is beginning to emerge as one of the brightest stars in Delhi NCR real estate.

Home Inspection

Home inspections are used to provide an opportunity for a buyer or seller to identify any major issues with a home prior to closing.

What is covered in a Home Inspection?

Home buyers and sellers may hire local inspectors to take an in-depth look through the home’s exterior and interior, checking the following:

1. Bathrooms: This will be inspected for leaks, ventilation and any other major issues. An absence of windows or fans could indicate mold or mildew problems.
2. Electrical: An inspector will check your home’s wiring, testing how the outlets and GFCI perform to prevent any shocks or potential electrocutions. They will check your electrical panel to make sure it doesn't present a fire hazard.
3. Foundation: While the inspector usually can’t look at the foundation (because it’s underground), he or she can identify secondary issues brought on by foundation problems, such as cracks or settling.
4. Grading: If your grading doesn't slope away from the house like it should, the inspector will let you know. Moisture seeping into your home as a result of poor grading presents a danger to your foundation and the structure itself.
5. Garage or carport: The inspector will look at your garage door to make sure that it’s operating correctly and that it’s well-ventilated (prevents carbon monoxide poisoning in the garage).
6. Heating, ventilation and air conditioning (HVAC): An inspector will check your HVAC system to see that it functions correctly. Exposed ducts will be checked for leaks or asbestos (in case of Centralize AC/ Heating).
7. Plumbing: The inspector will check plumbing, including all faucets, shower heads and visible pipes, for leaks. He will also test the water pressure and the state of the main water shutoff.
8. Roof: Inspectors will check the roof for any potential damage or leaks into your attic. He or she will also check the vents and gutters for damage.
9. Walls: The inspector will look at your siding and check for missing or damaged pieces, cracks, or signs of pests underneath.

Is there going to be Price Drop in NCR Real Estate?

As there is been a steady fall in demand in Real Estate sector of NCR and the experts say there is an urgent need for correction in property prices. In fact, according to them, a slight drop in property rates could be expected in the next few months. But, all of it really depends on how much focused builders are upon moving out their inventory. The real estate sector has been affected by declining sales due to high prices and low demand. Currently, NCR builders could be having anything between 35% and 45% of apartments in cold storage, with Noida alone accounting for as many as 40,000 unsold units.

Experts say the sale of property in NCR is currently witnessing an all-time low in the last three years and so price correction is the only way out. However, NCR builders say they are loaded with pending dues for leasing charges of existing land. With low demand and construction and input cost on a steady rise, the chances of rate cuts are low. Most of the builders are saying that they would like to wait a bit and watch how market goes and then come to conclusion.

Things to consider before making an offer for a Home

If you have seen enough houses and got your heart stuck in that one particular house and you think that’s the one, you would be quite excited about making an offer and get negotiations started. If you’re buying in a tight market where sellers have the upper hand you may even feel pressured to put in an offer the moment you see a house. But, before you write that check for your earnest money deposit, you should take a little time to investigate the house and the neighborhood so you have a better idea of what you’re buying. Your Realtor can be very valuable resource in gathering information for you and getting the answers to your questions from the seller’s agent. In the interim period, you can do some of your own research:

1. Search for neighborhood information online.
2. Check the crime report in the neighborhood online.
3. Check on the schools: Even if you don’t have kids, good schools in the neighborhood means that the house will maintain its value in future.
4. Check for local & neighborhood amenities: Like whats in the walking distance from your Home such as park, supermarket, repair shops, gym, etc. and if you are interest in some particulars facilities like tennis, swimming, then check the proximity to such facilities.
5. Visit the home at different times of day: In order to see how quite or active the area is in different times of a day or in different days of the week.
6. Schedule a home inspection: In order to know what repairs must be made and about how much they will cost. You may also be able to negotiate from the seller to pay for such home improvements
7. Test your commute: So that you would have an idea about the traffic pattern during rush hours.
8. Ask about taxes, homeowner association dues, homeowners insurance and utility bills.

Step by Step Guide Before Starting House Hunting for Your Dream Home

Step 1: Determine What You Can Truly Afford
Quite obvious, the first step is to find your budget as you do will taking any capital decision.
Here is our step by step guide for you to start determining your budget for a home or what truely you can afford:

1. Now that you've nailed down your numbers, it's time to start shopping for a mortgage lender with a reputation for good customer service and timely closings. You'll likely have a lot of questions—like how long the process will take and what the qualifying guidelines are—so choose a lender that answers them all satisfactorily.
2. There are plenty of different mortgage options to consider. Try choosing one from these common two: Fixed-Rate Mortgage, in which your interest rate remains steady for the duration of the loan, or Adjustable Rate Mortgage (ARM), in which your rate fluctuates to reflect market changes. ARMs can be a good if you plan to live in your home no longer than the original fixed period, otherwise, prefer Fixed Rate as if the interest rate rises, you could find yourself with a mortgage payment that's higher than you planned.
3. Prefer a 30-year term over 15—even if you think you can pay off your home faster. If you ever need to lower your payment in the future, you'll still have that option.
4. You'll also want to make sure you have enough savings left over to help pay for any home improvements, decorations or miscellaneous moving and maintenance costs that may pop up—in full. Meaning: You should not be using your emergency fund to cover these costs.

                                                 (Source for figures: Tom Gilmour, a CFP® at LearnVest Planning Services)
Step 2: Figure out Which Mortgage is Right for You and Get Pre-Approved 

1. Now that you've nailed down your numbers, it's time to start shopping for a mortgage lender with a reputation for good customer service and timely closings. You'll likely have a lot of questions—like how long the process will take and what the qualifying guidelines are—so choose a lender that answers them all satisfactorily. 
2. There are plenty of different mortgage options to consider. Try choosing one from these common two: Fixed-Rate Mortgage, in which your interest rate remains steady for the duration of the loan, or Adjustable Rate Mortgage (ARM), in which your rate fluctuates to reflect market changes. ARMs can be a good if you plan to live in your home no longer than the original fixed period, otherwise, prefer Fixed Rate as if the interest rate rises, you could find yourself with a mortgage payment that's higher than you planned.
3. Prefer a 30-year term over 15—even if you think you can pay off your home faster. If you ever need to lower your payment in the future, you'll still have that option.
4. Apply for a pre-approval, the process in which a lender reviews your financial information and commits to giving you a mortgage for a specified interest rate. Keep that in mind that a bank may approve you for a larger loan than you've determined you can afford, so don't be seduced by their findings—and stick with the budget you landed in the earlier stage.

Step 3: Decide Must Haves & Nice to Haves Features

There are very few lucky people who gets there perfect home within there budget, so before you go house hunting, brainstorm a list of what you absolutely must have in a home—and which features are simply nice extras.

First thing to decide in this step is where you want to buy a flat or a plot/land. Other examples of must-haves might include the number of bedrooms and bathrooms, distance to work and other places you frequent and access to your preferred schools. Some people also have strong preference on the amount of outdoor space a house offers, balcony space, etc. Things that shouldn't have on your must-have list ? The way a house is decorated, well-manicured landscaping, a pool—or anything else you can easily fix or install yourself.

After going through all the above 3 steps, I think now you are ready for house hunting which you can start by yourself or you could hire an agent which is generally really helpful as an agent can provide access to more home options than you'll likely find yourself, as well as set up viewing appointments and since home-buying can be an emotional process, an agent can also act as a mediator between you and the seller.