Purchasing a home can be an asset in the long term, but it shouldn’t destroy your present moment and finances.
The foremost affair you should do is make sure you are financially ready to purchase a home. In other words, you need to be debt free with a fully funded emergency fund. The emergency fund to be used in an emergency, such as the loss of a job, an illness or a major expense.
Be sure you can afford a new dwelling house by asking these questions:
- Can I make at least a 10% (preferably 20%) down payment?
- Can I afford a 20-year fixed rate loan?
- Can I keep the house payments at or below 25% of my monthly take-home pay?
For instance, you want to purchase a home worth Rs. 40,00,000.
Make sure you can pay at least Rs. 4,00,000 ( preferably Rs. 8,00,000) down payment.
If you monthly take home is Rs.1,00,000, then the monthly payment(EMI) should be Rs. 25,000 – Rs. 30,000 (25 % of monthly take home).
If you answered “yes” to all three questions, then you can afford a house. Otherwise, we strongly suggest you wait to purchase a house.
You want your new home to be a blessing, not a curse, right? Follow these simple guidelines and make a wise decision.