Factors To Consider When Buying A House

Written by Marc Adrian

Buying a house is a major undertaking. It’s a huge milestone in a person’s life, and one of the most expensive purchases you will ever make. It’s also not something you do on a whim with your hard earned money. It’s best to be well-prepared and well-informed so that it will be a rewarding long-term investment. It can get stressful when you’re not sure what you’re doing, so we have listed down the most important things you need to consider before buying one.

Decide on a budget.

Maybe you’ve always wanted a house with a wraparound porch, or a basement that you can turn into a man cave or a she shed. You have waited years for this day to come. That day when you can finally start shopping around for a dream house. Of course you don’t want to skimp on the amenities. But the real important question that you must ask yourself, other than what color to paint your walls or how many rooms you want on the second floor is, how much are you willing to pay for this house?

Consider your monthly income and your total monthly payables. Is the amount that’s left enough to pay for your monthly amortization? Do you have other sources of income that can help you pay for the monthly payments for your home?

If you have already been pre-approved for a housing loan, the bank will let you borrow the amount that they think you can afford to spend for your house. However, this is not an indication for you to spend it as you please simply because it’s there.

Most banks have a maximum loanable amount of 80% of the purchase price. Some banks base it on the appraised value of the property and the monthly income of the borrower. As a rule of thumb, set aside at least 20% of the purchase price to pay for the equity, plus another 5% for other fees and miscellaneous expenses.

Buy a house that matches your needs.

Before you do the actual buying, you must know what you want for a home. You should know the type of home that best fits your lifestyle. Do you want to settle down in the future and live in a nice and spacious home? You can look at a bungalow with loft type of house that will be perfect for starting families. If you live by yourself and want a home that’s closer to the city or your workplace, you can purchase a studio or a 1-bedroom condominium unit. If you don’t want to live in a condo but want more living space, you can also look at townhouses.

Also research about the location where you want to reside in the future. It should be close to public transport connections, schools, hospitals, banks, markets, and other commercial areas. It should also be a safe and protected location, with good infrastructure to safeguard your property from floods, earthquakes, and other natural calamities.

Seek the advice of experts.

The best advice that you can get about house buying will come from the experts and the licensed professionals. They can answer your questions about properties and property ownership. They also have access to different property developers and sellers in the country.

You can walk into any property developer’s showroom and a licensed real estate agent will be more than willing to answer all your questions. You can also go online and search for reputable firms for recommendations.

Licensed real estate agents will provide professional assistance when it comes to finding the right property that will suit your requirements and your budget. They can negotiate terms and conditions for you, and will guide you through the entire process. Just communicate what you want and they will do their best to make it happen.

Know your developer.

This applies if you’re thinking of purchasing a pre-selling property. You can choose to buy a property from a top real estate developer with a proven track record and a sizable capital. They have strong reputations in the industry, so purchasing a property from them will be nearly risk-free.

There will also be small or first-time property developers who can offer good houses at competitive prices. However, they are also conducting business against the odds. They usually don’t have previous records of their successes in the real estate industry. And as an industry newbie, it may be harder for them to get approved for commercial loans that will fund their projects. What usually happens is when the initial capital has been spent by the developer, financing for the construction of the property will come from the property buyer’s pockets. This will be riskier because property development will rely on the cash flow. Once the funding stops coming in, this usually becomes the cause of delays and, ultimately, subpar deliverables.

Get bank financing.

If you will wait until you earn your first million before buying a house, the cost of property will have risen exponentially by then. And you would have wasted away all those years renting apartments when you should be living in your own home. But if you get a BPI housing loan now, you can amortize your dream home while residing in it at the same time. It’s a win-win situation.

Of course, you need to be able to get a bank loan first. Bank approval will depend on your monthly income, as well as your credit history. If you have unsettled credit card bills or personal loans, it’s advisable that you settle these first before applying for a bank loan. Getting a bank loan can be quite complex, so it’s also good to shop around and compare house loan terms and interest rates.  Make sure that you also have the necessary documents for your loan application, like pay slips, income tax returns, and employment certificates. The sooner you complete and submit the requirements, the quicker the loan approval.