MANILA - We all dream of owning a home someday. And why not? A home means stability and permanence, where one’s family can grow roots, seek refuge and build a life together. At the same time, it is always a valuable asset and an investment in itself.
Have you thought about buying your own home but don’t know where to start? Have you ever wondered if you can even afford it? If you can, do you have an idea of what your money can buy? Whether you’re thinking of getting a tiny studio unit or a sprawling house with a large yard, you will need to put considerable thought into your plan.
Owning a home calls for responsibility and commitment. It calls for a lot of thought and a careful evaluation of your lifestyle, finances, as well as your present and future needs. Here are 7 factors to consider in deciding if you are ready to own your first home.
1. Are you ready for this investment?
Do you have enough funds to buy your dream home? Do you have a regular source of income? Are you getting a big inheritance soon? A house is usually a considerable investment, and you need to have enough money to be able to purchase one. If you plan to take out a loan for your home, you still need to have the financial capacity in order to qualify for financing schemes offered by both banks and developers.
2. Consider your present and future plans.
A house is not exactly easy to dispose, considering the sums involved as well as the paperwork and taxes that it entails. This is why you have to know your reasons for buying a house, and think how this fits with your life plans. For instance, are you planning to move out of the country anytime soon? If so, having a house makes you less mobile. Are you planning to have children soon? If so, you might want to think about getting something bigger than a tiny studio in order to accommodate your growing brood.
3. Location, location, location.
This is one of the most important considerations you have to think about when getting a house. Location almost always dictates price, which means while you may be able to afford a townhouse outside Metro Manila, you may have to shell out more for a similar unit in the city. At the same time, its location will affect your life – the amount of time you need to go to work, or the places you will most likely frequent. You need to think of a location that is best suited for your needs.
4. Let's talk financing.
Even if you do not have cash to pay upfront for a house, you may actually qualify for financing. Banks offer loans, as well as developers. Loans could stretch for as long as 25 years, depending on your age. Gauge your capacity to do regular amortizations, and check how it would impact your cash flow. Most financial experts recommend that payments on homes should constitute no more than 1/3 of your regular expenses. Also look at interest rates.
5. Look to the future and appreciation potential.
When buying a house, you should also consider how its value is likely to increase in the future. Look at developments that could possibly lead to an increase in the property’s value – new roads, malls or other commercial developments usually push property values higher. This means that you can actually sell your property later on and stand to earn from the transaction.
6. Remember the warning "Buyer Beware."
When buying property, you need to make sure that everything about the transaction is above board – the title should be free from liens and encumbrances, taxes should have been paid, and association dues settled. You also want an assurance that your house was built well and in keeping with building standards. This is why it is important to know the background of the seller. Some developers have a solid track record, but even then, make sure to do your research about the seller.
7. Ask yourself: To build or to buy?
Do you prefer to build your own house instead of buying one? This allows you to design everything according to your own wishes. However, it is also a more time-consuming process since you have to deal with an architect and contractor, while checking regularly on the work. You also need to find people that you can trust to build your home.
Owning your first home is a major decision, so make sure to think through the process before making any decision. Ask questions, do your research, and think about your life plans before you make the decision.
Grow Your Money is an editorial partnership between News.abs-cbn.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.