Is it time to move out of your parents' home?
Things to consider before buying your first home
MANILA, Philippines - You’re in your twenties with a stable job and thinking it’s time to strike out on your own. After many years living in your parents’ home, you feel that the time is right to leave the nest and test your wings.
While renting in the city seems like the more manageable option, buying one that you can call your own is ultimately the better decision. Consider that the rent you pay monthly is money gone forever. Payments on your mortgage, however, amounts to a tangible investment that can shelter you for years or an asset that you can sell at a most opportune moment.
Lower interest rates complemented by encouraging financing packages from banking institutions have driven the demand for housing loans. Match that with a robust economy, appreciating land prices, and the continuous development of new condominiums and residential villages, and you have the wonderful opportunity to make a wise investment.
First off, find out how much you can afford.
Of course, the dream would be to own a piece of prime real estate at the heart of a growing city or a four-bedroom home with a sprawling yard in a gated community, but you have to be realistic. Take a close look at your savings and monthly expenses to figure out how much you can spend on mortgage payments. Financial advisers recommend you should not have to shell out more than 28 percent of your monthly income to mortgage payments so that you can still pursue your other money goals like planning a dream wedding or going on a much-needed vacation to reward yourself.
Engage the services of a trustworthy and experienced real estate agent.
Most people try to scout options on their own, reading newspaper classifieds or going online. But a good real estate agent knows the lay of the land, so to speak. He or she can give you all sorts of insider information from the type of properties available in a particular location as well as how long such properties have been on the market - and why. Choose one that you can absolutely trust as you’re going to be plunking down a lot of your earnings on this investment. Go through the website of the Real Estate Brokers of the Philippines (www.rebap.com.ph) to acquaint yourself with potential candidates. Better yet, ask referrals from family and friends; those whose character and integrity they can vouch for.
Narrow down your choices.
Whether you’ll invest in a condominium in Bonifacio Global City or a house in Santa Rosa, Laguna depends on the kind of life you’d want to be living in for the next couple of years. Are you settling down anytime soon? Perhaps a three-bedroom affair in an exclusive subdivision with parks and schools nearby would be to your liking. If you expect to stay single for a few more years yet, then a condominium unit accessible to places of work and recreation is ideal.
Take your time in checking out each and every property that catches your attention.
Acquaint yourself with the developers. Look at the properties that they have established. If possible, get the feedback of current homeowners; this is particularly relevant if you are buying a property at its pre-selling period. If your real estate agent cannot help you with this, you can always tap your network of social media friends.
If you are looking at buying a finished house or condominium unit, then go through the property thoroughly, inspecting its every nook and cranny. If an engineer or architect friend can accompany you during the inspection, then that would be even better.
More importantly, keep tabs on land values. You might end up selling your home in the future, and if it’s located in an area with appreciating land prices, you’ll get a better return on it.
Shop around for mortgage options.
When you have finally decided on the property, explore your mortgage options. Put simply, a mortgage is a loan which uses a piece of property as collateral. If you are unable to meet your mortgage payments, the lending institution can take your property away, which in most cases is the very home that you’re paying for. Different financial institutions offer different packages, offering a variety of terms and interest rates. Most developers are also allied with banking institutions to meet the financing needs of potential buyers. Analyze each option carefully.
Read before you sign.
Because this is your first time to make such a significant purchase, it is best to seek expert advice, especially when signing date draws near. Ask a draft of the contract from your real estate agent, and if possible, have a lawyer go through the papers with you. If there is something that you do not understand, then ask for an explanation. Don’t let go of the document until you perfectly understand its weight and meaning.
Buying your first home could be one of the biggest decisions you will make in your adult life – make sure it is an informed choice.
Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.