OFFICE OF THE PRESIDENT • REPUBLIC OF THE PHILIPPINES
QUICKNEWS

Are You Ready to Be a Home Buyer?

By: Michelle C. Cruz

 

Home Guaranty Corporation

Having one’s own home is a dream come true for anyone. Aside from the sense of pride that comes with it, owning a home can prove to be one of the best investments in life. But try not to get carried away by the thrill and excitement of homeownership. Before jumping to that life-changing decision of purchasing a house, take a look at yourself first and see how prepared you are to be a homeowner.

Below are some questions to help you assess your capabilities and preparedness for this serious commitment:

Are you FINANCIALLY HEALTHY?

  1. Do you have a good credit history?
    Credit is not really bad at all. What is bad is when your debts are not being paid. To know if you have a good credit history, ask yourself, “Have I already settled all my debts? Do I pay my bills on time?” So, why is having good credit history beneficial for you? It’s simple - good credit history will help you get a lower interest rate on your mortgage and a lower monthly amortization.
  2. Do you know exactly how much you can afford?
    Do you have more than enough cash? Your dream house or the house you are planning to buy must match your financial capability. Once you know the cost of the house you want and the amount of mortgage payment that will run, the next thing to ask yourself is, “Do I have enough money for the down payment?” Usually, a down payment is 20% of the property value. For example, you will need to pay a down payment of P200,000 for a house that is worth P1 Million. There is always more money involved in purchasing a house. Aside from the mortgage and the down payment, you still need to pay utilities, homeowners’ insurance, property taxes, homeowners’ association fees and maintenance. You also need money for the initial repairs, moving expenses and decorating cost. To be ready is to have enough money to meet these financial responsibilities.
  3. Do you have a steady source of income?
    Buying a home means committing yourself to mortgage payments for 10 to 30 years. While paying your monthly amortization, you cannot afford to lose your job or any source of income. You also need a consistent cash flow to pay the other expenses that come with homeownership. Inconsistency in your cash flow will greatly hurt your paying capability.
  4. Have you readied your emergency savings fund?
    Unavoidable situations such as a serious illness, an unexpected job loss and a major unplanned expense might disrupt your steady income. Having an emergency savings fund helps you carry out your financial obligations until you can get out of these difficult periods. The general rule is emergency funds should be six months or a year’s worth of income, or three to six months’ worth of your expenses.

Are you MENTALLY & EMOTIONALLY prepared for this?

  1. Can you make a long-term commitment?
    How long do you plan to live in the new house? If you have plans to move early, then you are not yet ready for homeownership. The average appreciation is likely to be around 5% per year, thus it is advisable to stay at least three to five years to cover buying and selling costs.
  2. Are you ready to become your own landlord?
    Becoming your own landlord means doing or paying for home repairs and maintenance will now be your sole responsibility. These will require not only your money but also your time and energy. If you are ready to live this lifestyle, then you are ready for homeownership.

Now, are you really ready to be a home buyer? If not, take your time and do more money saving and careful planning first before making this decision. But, if you are very confident that you can handle well all the demands and pressures of purchasing a house, then it’s now time for you to buy one. Good luck with your house hunting!

 
 

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