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You are just starting out as a young professional. You got everything under control. But at the tender age of being a twenty-something, you want to fast forward to the moment when you get to buy your place.
Buying a house entails risk, they say. However, that is an ancient thinking. While home buying always include additional costs, acquiring one isn’t as complicated as it used to be years ago.
Many working Filipinos are now opting to look for properties for various reasons. Some young adults want the comfort and convenience of a condo. Others want the flexibility of buying a low-cost housing in Cavite or other accessible communities.
It may be easy to acquire property, but you have to ask yourself if you are ready for the reality of having one while being in the early stages of your professional life.
Truths about homebuying
Truth #1: Buying a property is a huge responsibility.
Besides the obvious of being independent and living alone, buying a property means financial responsibility. You can purchase a property without a savings fund. Banks and government agencies such as GSIS, SSS and PAG-IBIG offer loans with flexible term payment. Other companies also offer cash advances or loans that will be carried over the employee’s monthly salary.
Regardless of the source of funding you choose, you have to make sure you have it all planned out. The agencies and banks will check your qualifications. Your current income is a factor that determines if you can afford to pay the amount of money you owe. Other than your income, your spending habits have to be kept in check.
Financial institutions expect you to pay your dues accordingly. Even your salary is enough to cover the monthly amortization and loan fees, your shopping trips and lifestyle habits each payday may overpower your obligations. You have to consider other areas of your life. You may have to spend more on others so make sure getting a house doesn’t mean you have to sacrifice your priorities in life.
Truth #2: Credibility is important in credit.
When you get a loan, you need signatories. The people you plan to include as signatories will serve as your referral.
Banks will ask you for guarantors, who will pay the fees and debts on your behalf during bankruptcy. Looking for the right people who will fit the bill is difficult. It requires trust from both ends. You need to establish good credit history so people can make sure you won’t fail to meet obligations. Their doubt level will be less and people will more likely accept the proposition if you are trustworthy.
At the same time, you need to choose people you can trust. Some people want to have their financial activities under wraps. Thus, include individuals who are responsible when it comes to personal information. Most of all, choose someone who accepts to be your fallback in case of emergencies.
Truth #3: Knowing the taxes and fees will save your life.
Advertisements, sale offers, and packages will not include the exact figures on charges, fees, and taxes.
It’s important to research these, so you know what to expect when an offer is on the table. Find out the breakdown of monthly and annual fees from close peers and relatives with a similar property. That way, you won’t be surprised of the accumulating digits as the days pass.
The initial payments are the property reservation fee, monthly down payment, tax and spot bank charges from the bank. There’s also the closing sale costs which may not be divulged by your broker until later. It’s advisable to have at least 20% of the down payment price saved for these purposes.
Truth #4: Insurance is necessary.
Insurance is helpful especially for events beyond your control. Fire, indoor flooding, and earthquake are accidents waiting to happen. There’s no particular time and day for these activities.
Signing up for an insurance gives a sense of security as it offers a buffer in case of these events. An example of insurance is the Mortgage Redemption Insurance (MRI) which is part of what you pay when acquiring a housing loan. The insurance will cover the family’s daily expenses in case of death and disability of the borrower. There are other benefits to MRI, but you also have to see if the coverage of the policy works for you. It’s important to have insurance that is greater than the asset value.
Same as other life goals, home buying has steps to follow. You need to have the determination to build you cushion fund. You must be ready for the responsibility of maintaining a property. You must get a hold of yourself and make a strong financial history. You need to understand the terms and conditions of the payment and insurance policy.
Buying a home is not a walk in the park, but getting a dream home as a young adult will bring the park at a close distance.