A life-changing decision requires a good plan to make it a reality. Here are steps on how to start planning on buying your home. Planning not only prepares you to the time-consuming process of homebuying, it also eases out any worries as you meet every milestone towards ownership.

Are you ready to buy a home? Whether it is a condo for sale, house and lot unit, or a raw lot you spotted at a pretty vantage point in the mountains, congratulations are in order! You are probably giddy with the prospect of investing in a home, and may have imagined the moment where your real estate agent has officially turned over the keys for you to move into the property.

But before we go there, it is important that you should known what you are going into. Buying a home, whether it is as your permanent residence or for investment, is a pretty daunting journey. There is big money involve, so naturally, the first thing you have already answered before taking the plunge is if you are financially ready.

Figuring out around how much can you actually afford to buy a home requires more than the amount of money you have saved in the bank. If this will be your first time, you tend to focus more on the peso amount a bank can lend you. Any financial expert will tell you that this is not the right way to go, as there are costs that are not accounted for in the total contract price, and may caught up with you once you start making your monthly downpayments.

Understanding how to find and finance your home is just one of the many things you need to start planning for to make the homebuying journey more manageable. Here are ten considerations on how to start planning buying a home:  

1.   Research on the properties that you like, including their pros and cons.

When researching, focus not on the actual listing. Determine what aspects of the property do you actually like. Do you want to buy a condo for sale in the city center or nearby a shopping mall? Are you looking to live in a neighborhood that is just five minutes away from everything, including transportation hubs? Or do you like a home that offers a bigger footprint? These questions will help you narrow down the options from the thousands of listings available online.

Moreover, you may want to note the current real estate market trends like the change in asking prices or how long certain property types stay available online. This way, you would want to take advantage of the timing when a property you are looking for is considerably affordable.

2.   Determine your affordability.

Before getting prequalified and preapproved for a housing loan, you may want to check first your capacity to own a home should you choose a property that you are eyeing.   When we say capacity to own a home, it simply means your capability to pay off your monthly amortization payments alongside your monthly expenses. First-time buyers tend to overlook this distinction.

And when we say monthly expenses, these are your utility bills, food, water, and other living expenses plus ownership costs like homeowner association fees, maintenance fees, mailbox fees, security, real estate property tax, and whatnot. Ownership costs do not have an estimated figure, and can sometimes overwhelm you. For example, a busted air-conditioning unit might have shortcircuited your electrical systems. Or, a flooding at home due to a busted pipe results to water damage not only on your hardwood floors, but the neighbor’s ceiling below. Or the homeowners’ association voted on painting the entire circumference of your neighborhood, and that you need to chip in.

As such, it is also a good thing to plan for saving three to six months’ worth of emergency funds just to cover unexpected home ownership expenses.  

3.   Prepare all financial and related requirements for a smooth loan prequalification and preapproval.

Not everyone can afford to buy a home in cash.

It can be too early in the homebuying journey for you to get preapproved for a home loan, but it does not hurt to get prequalified to determine how much money is available for you to buy the home you wanted. In order to get prequalified, prepare all the documentation your lender or the bank will require to determine your affordability as a homebuyer. Examples of these documentation are bank account statements, certificate of employment, payslips, and copies of your income tax returns (ITRs). Your lender or bank may also request any documentation of your other current or past loan payments as well.  

4.   Schedule a property visit if possible on your final list of prospective properties and the neighborhood.

With the pandemic, this can be a tricky thing to do without running into health risks. As long as you practice social distancing, wear protective mask and face shield, and comply with house rules on sanitation, a property visit will always beat any virtual tour or live streaming visit. You get to physically tour the actual property and get the feel of what it feels like living in the home. You also get the chance to conduct a property inspection and check the quality, look, and feel of the house and lot unit, condo for sale, or townhouse for sale. You can also take videos and pictures based on your personal perspective, which is great because you may be able to capture certain aspects of the property that a virtual tour or live streaming visit may have missed. Moreover, utilities and amenities like parking and garbage system are not often introduced or do not have that much context in a property listing, and a physical visit at the property tends to solve those concerns for you.

Taking a tour of the neighborhood gives you a perspective of community life that is personal to you. You’ll pay attention to things in the neighborhood that are meaningful to you, like the number of convenience stores in the area, banks and other modern conveniences, and even green spaces. You’ll also pay attention to what life in the community is, and if public services are available and visible.  

5.   Request a property appraisal.

An appraisal is an unbiased professional opinion of the value of a property. A property appraisal is often done in mortgage refinancing to determine the market value of a home. While it is not common practice in Philippine real estate, it is a smart move to consult with an actual professional who can give you an opinion about the property you are eyeing on. Especially if you are planning to lease it orresell it at a premium value, a property appraisal will let you know if the total contract price is worth it.  

6.   Don’t have the downpayment yet? Set up a short-term investment goal.

Just because you are planning to get a home loan does not mean you are not shelling out money for your real estate investment. You need to at least raise 20% of the price range of a property type you are eyeing to invest in. While some developers offer a payment option where you can pay your downpayment in installments, you would rather not pay the interest and put it away in an emergency fund instead (see #2).

If you own a salary ATM, for example, some banks now offer the option of allowing you to automatically schedule saving a portion of your salary and put it away on a locked account. This way, it eliminates the act of actually saving money (because sometimes, it doesn’t happen too often).

7.   Choose a real estate agent and a banker or lender who are willing to work with you.

Every homebuyer has his or her own priorities. You would want to work with real estate and finance professionals who not only understand your needs, but also help you get through each milestone in the homebuying journey.

Additional Tips For Foreigner Buyers

Knowing the law and knowing someone who can best represent you are crucial in buying a house and lot, condo or raw lot  in the Philippines.

Foreigners are not allowed to buy land in the Philippines, but they can legally own a residence. The easiest choice is to buy a condo, as you are allowed to do so as long as 60 percent of the total units in a condominium building are owned by Fiilipinos. If you plan to buy a house and lot, a long-term lease with a Filipino owner is one option.

8.   Get representation.

Even though there’s social media and messaging apps, there will still be instances wherein you need to be physically present to close real estate transactions. As such, getting representation that truly understands your priorities and interests, and have the authority to execute decisions is crucial in buying a home. More so if you are living in a different timezone. It can be real cumbersome to deal with every single decision with the real estate agent.

9.   Learn the legalities and accountability of homeownership.

There is not a lot of lawyers who are real estate experts whom you can hire, but you can take it upon yourself to learn about the legalities of owning properties in the Philippines. Pay attention to key real estate regulations, including those in typical real estate transactions, and proofs that establish ownership and transfer. Also understand the accountabilities of owning land through means such as buying a house through marriage or through a company.

Visit ZipMatch for more tips on preparing to buy a home in the Philippines.