How much money should I save before buying a house?
There are many questions that come up inside the mind of a person before buying a house. These doubts are the maximum in the case of first-time buyers. The most common of these doubts are about the sum of money a buyer should save before buying a house. It depends on many factors such as your income, savings you have, loan eligibility, and your estimated budget. Make sure, You save sufficient money to face an emergency without any problems.
Buying a house is a huge investment for most people and getting the best deal out of that investment is the top priority for a buyer. You should save sufficient funds for a good down payment so that you have to pay lower EMIs for the loan repayment and increase the chances of getting a higher credit score. Your savings should be able to cover the other buying expenses or any other hidden charges.
You should also save a pretty good amount in your emergency fund so that you don’t face any problems in case of an emergency. Having an emergency fund is pretty vital because such situations require instant transactions and liquidating assets can be pretty time taking.
Many buyers who do not have much savings and are unable to pay high down-payment face problems in getting a loan. This is when an insurance mortgage comes into the picture. It is getting popular in the Indian market with every passing day. Private mortgage insurance is also helpful for such homebuyers. It is like life insurance that protects a borrower from the lender in case of a defaulter. It covers a large portion of the loan amount and thus saves the interests of both the borrower and the lender. Private mortgage insurance is helping people in getting loans more easily and fulfilling their dreams of having a home.
If you are a first-time buyer then you should check your funds thoroughly because you have no experience making you more prone to making mistakes. You can also buy a house with your savings if you have sufficient savings but it is not a smart choice because you will have to pay a lot of tax whereas having a home loan will not only increase your buying ability but it will also provide you tax benefits such as tax deductions for the repayment of the principal and interest rate of the loan.
All home buyers especially first-time homebuyers should check the loan schemes available in the market and the amount they want to invest into a house covering all the buying expenses. While calculating this, Save a reasonable amount of money in your emergency fund. There is no fixed amount you need to save before buying a house. Your savings should rely on the above-mentioned factors and your annual income. If you follow the above-mentioned things properly then you will be able to save a sufficient amount of funds to cover all buying expenses including the emergency fund. This will make buying a house a much safer and easier process for experienced as well as first-time homebuyers.