A 20-point checklist BEFORE you buy a new house
Discuss these issues HONESTLY with your spouse, parents and maybe a couple of friends. Once you have answers to about 70 per cent of these questions, go and buy a house.
With the US dollar not coming down to 45 (it is 60 now), people have postponed their foreign trips. Now with all they all want to buy a house.
But before you do, please read these questions and see if you have their answers to know if you can afford one.
Here we go:
1. Can you afford to pay at least 40 per cent of the cost of the house as a down payment?
2. Can you afford to pay the EMI on just ONE salary while running your household?
3. Will you REALLY save any rent that you are currently paying?
4. What happens if you buy the house, and at the same time your wife gets pregnant and is advised bed rest?
5. What happens if one of you quit your job voluntarily and the other one lost her/his job involuntarily?
6. How prepared are you for a loss of job coupled with a fall in property prices?
7. If you take a 25-year loan, how quickly will you really repay it?
8. Do you know at what inflexion point of the housing boom you are buying a house?
9. Are you buying a house to live in or hoping that the property prices will double in three years time as it has happened for your friend?
10. Are you using the immediate past data to predict immediate future data? This is a HUMAN disease, and you are human.
11. Do you strongly believe that real estate prices were a NEVER-coming-down spiral? If that were to be true, the BFSI (banking, financial services and insurance) companies would have convinced you that YOU should NEVER buy a house but PERMANENTLY stay in a rented house; they would own the house.
12. Do you have a parent who can step in and take the burden? Or are they financially dependent on you?
13. Is your spouse supporting you wholeheartedly or are you PUSHING your agenda on an unwilling spouse?
14. If things go wrong will your spouse stand by you or bug you with ‘I told yous’?
15. Are you buying a house as a scoring point, because somebody with who you compete has bought one, or you really need a house?
16. Is it an ego problem that you cannot stay in a ‘rented house’ any longer?
17. Have you asked your boss about your appraisal and also your spouse’s boss’s view on her/his appraisal and job prospects in general?
18. Are you overpaid? Be blunt. If you are and you lose your job you may not find a new job with a matching salary easily…
19. What happens if you are transferred to a different location? Can you afford rental at the new place as well as an EMI for the house you have purchased?
20. Finally, how much of this decision was created by media hype, parents, in laws, friends and salesmen from a mortgage company?
Lots of thinking… and lots of questions to answer…
Photographs: Uttam Ghosh/Rediff.com