Owning one’s home is perhaps the ultimate Filipino dream. It gives every Filipino family a sense of security -- that there’s always be a roof over one’s head no matter what. But as with any dream, the road toward this goal is often daunting that the first-time homebuyer is almost always tempted to settle with the first house that falls within his or her price range without giving the purchase much thought.
To make matters worse, the plethora of taxes and fees that must be settled and paper works that need sorting out are enough to make the first-time buyer feel hesitant, confused, and nervous.
As with any major purchase, buying a home requires much research, plenty of help, and unending patience. You will also do well to take these tips into consideration.
1. Know Your Needs
First things first: What are you looking for in a home? Or more appropriately, what sort of home fits your lifestyle?
There is a huge variety of house and apartments available out there, and choosing one is perhaps the first big decision one needs to make. Think about whether you want to live in a single-family home with a yard, a condominium where a property management office does the maintenance, or a farm.
Consider also the overall utility you desire. Do you need a house with four bedrooms? How many bathrooms? Do you want separate family room for children to enjoy or a den for your privacy? Garage for the car or a workroom? How fancy or large of a kitchen would you want? List these features in order of importance.
2. Research the Market
Once you have identified the type of property you want and need, it’s time to research the market on what’s available out there. Do not settle for the first one that you will come across. In fact, the Philippine real estate market is booming, developers have plenty of units in their inventory.
This is also a good time to research about the area or location you have in mind. Does it have good transport connections, hospitals, schools, banks, and commercial areas? More importantly, does the municipality or city where the property is located have good infrastructure to protect houses from floods and other natural calamities?
3. Create a Budget
The second step is creating a budget and sticking to it. This requires taking a long, hard look on your finances. Determine the price range you can afford and how much cash available for the deposit and buying costs. This will enable you to determine what type of property you’ll be able to afford.
As a rule of thumb, prepare at least 20 percent of the purchase price to qualify for an 80 percent loan-to-value ratio loan, and an additional 5 percent of the property’s purchase price to take care of fees and other buying costs.
Once you have determined your budget, you’ll then know what type of property and where you can afford. Do you want the biggest and best house in the best neighborhood that you can possibly afford or do you want a more conservative overhead and debt?
4. Seek Help
From real estate professionals, of course. These are the people who can and definitely want to help you successfully make that purchase.
Real estate agents will locate several homes that fit your needs, help you select the correct home, negotiate the terms and conditions of purchase, and generally help you through the process.
Mortgage brokers will also help you find the mortgage loan with the best terms for your situation. Closing services will organize and manage the paperwork to assure a smooth transaction.
First-time buyers are usually a bit nervous, but relying on professional advice can ease the tension. Tell the professionals what you want, and let them help you.
5. Know Your Developer
This is especially more important when buying a pre-selling property. According to Thailand-based Swiss lawyer Rene Philippe Dubout, developers can be generally separated into two main categories. First you have the top developers, most of which are listed and have substantial capital and a track record of success. Purchasing a house from one of these developers is nearly risk-free, because these developers are concerned about their reputations.
On the other hand, you have first-time developers, who, although not all are bad, are doing business against the odds. First-time developers have no previous record of success in real estate development, and because of their first-time developer status, it’s hard or even impossible for them to access commercial loans to finance their projects. Once the original capital has been spent, continued financing for the construction and development of the project will come out of their clients’ pockets. As the level of sales drop, the developer begins to encounter financial difficulties as cash flow is less than anticipated, or the project construction will begin to suffer more and more delays as a result of unwise spending. These developers hold little prospect of success and their projects are likely to fail because of insufficient experience, knowledge, and capital.
6. Secure Financing
If you are getting a bank to finance your home purchase, make sure that you have all the necessary documents with you, such as tax returns, payslips, or employment certificates. Getting a mortgage loan can also be very complex, so be prepared. It also pays to seek the help of a mortgage broker, as not all loans are uniformly created. Try do to loan shopping; that is, talking to several institutions and comparing their rates and terms. As approval for loan also depends highly on your credit history, make sure to sort that out before applying for one.
7. Save, Save, Save
Finally, the process of buying your first home does not end when you move in. On top of the mortgage, which you need to pay every month, there are other expenses to take care of such repairs, association fees, insurance -- the list goes on. The rule of thumb is not to spend more than 30 percent of your monthly pay on paying off mortgage loan; anything higher than this and you will find it difficult to cope with your other expenses.
