Last Updated on December 26, 2019 by Lamudi
Owning a home is an aspiration almost every Filipino wants to achieve. The path towards living the dream, however, isn’t easy. If you ask around, a lot of aspiring homeowners are intimidated by the process. The more that you understand, the less stressful it will be, and the less intimidated you will be.
That said, here’s a walkthrough of the different steps in the home buying process:
Step 1: Getting a Loan
The first reasonable step in buying a home is arranging your finances. Before you go about finding the home of your dreams in a nice neighborhood, you first need to know you can afford it. It’s important to be financially ready for one of your biggest life investments. Dealing with finances when buying a home is centered on qualifying for a loan. There are three aspects you need to watch out for in this regard:
Loan officer. A loan officer is the person who will get a mortgage on your behalf, which means if you want to get the best deal, then you should get a professional who can match loan products with your needs. While a person with years of experience and an effective way of communication can be a good candidate, nothing beats a personal referral. If your tita or bayaw is willing to vouch for someone, then that officer must have done a really good job.
Loan product. After choosing a reliable loan officer, they will give you a pre-approval application form. You’ll fill this out with information about your income, credit history, and current assets. You’ll be requested to provide bank statements, an employment certificate, income tax return copy, and other relevant documents.
With such information on hand, your loan officer will find a home loan that fits your needs and paying capacity. The terms of the loan will largely depend on your credit history and downpayment. The higher your credit score is and the more money that you can pay for the house upfront, the better the terms will be.
Legal costs. Aside from choosing loan products, your loan officer will also give you an idea how expensive of a house you can qualify for, as well as how much you should prepare for closing costs (which includes documentary stamps tax, local transfer tax, and notarial fee, among many others).
Step 2: Searching for a Home
Once you get these money-related matters in order, you can get pre-approved for a home loan in a week or so. With a figure in mind, you can already start looking for properties. For this, you can consider these two things:
Real estate marketplaces. Listings on the internet will help make your search more efficient. With the help of search filters, you’ll be able to find properties that will not just accommodate your lifestyle needs, but also your neighborhood preferences.
On the Lamudi website or app, you can control listing results you see by keying in information such as price, floor area, land size, number of bedrooms and bathrooms, and of course, location. You’ll see photos of the actual property, along with the contact number of the broker. By visiting online marketplaces, you’ll be able to see your options, and more importantly, narrow them down and visit only the properties that tick off everything in your needs list.
Real estate agent. If going through listings couldn’t be squeezed into your busy schedule, the best way to move forward with the home buying process is to get a real estate agent. This person will be primarily responsible for finding properties that match your needs and wants, as well as negotiating with sellers later on. There are a lot of realtors out there, but you want someone who’s also referred by trusted friends and family and has good reviews online.
Once you’ve narrowed down your property options, get ready to go to unit viewings. Be proactive in the visits. Keep an eye on key details, like the walls, floor plans, plumbing systems, ventilation, and gates with locks. A realtor or an observant relative can help you spot red flags.
Step 3: Making the Offer
Once you have decided on a property, it’s time to write the seller a letter expressing your intent to purchase the property. The letter of intent should include key information about the transaction, including the date of the offer, description of the property, your offer, mode of payment, and other relevant details. A realtor can help you come up with a reasonable offer.
When the seller agrees to your offer, they will give you a reservation agreement, which outlines the fact that they’re taking the property out of the market, reserving it for you. After this, you’ll have to pay the reservation fee.
Step 4: Finalizing Financing
From there, the loan officer then finalizes your application. When everything’s settled, the financial institution will send a letter to the seller that your loan is approved. This is called the letter of guarantee, it confirms that the bank shoulders the costs in case of buyer default, and that the loan taken out can cover the financing of the purchase. At the same time, the officer will also give you a clear breakdown of how much you owe in downpayment and closing costs. Pay these and be ready to sign a lot of paperwork.
Step 5: Moving into Your New Home
With the paperwork signed and financial obligations met, you can now move to your new home. If moving expenses are a little overwhelming for you after that taxing process, enlist the help of friends and loved ones. Promise them a merienda of pizza and beer, in exchange for their assistance.
Indeed, buying a home is a complex process. Arm yourself with the right information to make this journey a little less stressful. Refer to this guide as you reach for your homeownership dreams.