Imagine yourself coming home to your family after a long day of work. Imagine sitting down on a beautiful couch in a spacious living room and clicking on the remote control to watch your favorite TV show. Now, look at the thick concrete walls, the appliances, and the beautiful house interior you worked so hard for. That is the kind of refuge and security you and your family deserve. More importantly, that is the kind of investment you have to carefully plan in order to turn into a reality. If this is your first time buying a house, this guide is for you!
Types of Houses, Location, Purchase Price
When you decide to finally invest in a house, make sure that you are choosing the right type that fits your family’s needs and your budget. This is not a decision you make overnight as there are several factors you need to consider:
・Types of Houses
A dream house can be further classified into four types. The key differences among these types of houses might help you find the right match for your budget and needs:
- Single-Attached - shares a firewall with another house and is generally less expensive than single detached houses
- Single-Detached - stands in the center of a lot and the lot perimeter can be secured with a fence; more expensive than single-attached houses
- Duplex - two different houses with different floor plans but are located on the same lot; less expensive than or even half the lot price of single attached and single-detached houses
- Townhouse - three or more houses on a big lot; tend to be more affordable than duplex houses
・Location
Is your house conveniently located near your workplace and your children’s schools? Factor in the time and costs you will spend commuting or driving to run your errands. See if choosing a more urban location for a higher price can actually save you more time and money in the long run. Nevertheless, if your family enjoys a more rural lifestyle, then you can take advantage of the lower prices of properties outside city centers.
・Purchase Price
Convenience comes at a price because properties in urban areas are more expensive than those in rural areas. The land value of a property will further appreciate as important establishments like hospitals, malls, and groceries surround it. Thus, you have carefully evaluate what you want and what you can afford.
・Amenities
Buying a house often comes in a package with the amenities that subdivisions offer. Always do your research first and check if the amenities offered can justify the price you have to pay. After all, buying a house will demand a huge chunk of your savings and salary.
Taxes, Fees, and All Costs You Should Know
On top of the purchase cost, there are several extra costs you have to settle to complete the transaction:
・Title Registration Fee - this refers to the tax charged for the legal registration of the house title to the Registry of Deeds and is calculated as 0.25% of the sale price or fair market value of the property, whichever is higher
・Documentary Stamp Tax - this refers to the tax charged for the documentation of the sale and is calculated as 1.5% of the sale price or fair market value of the property, whichever is higher
・Transfer Tax - this refers to the tax charged for the ownership transfer of any property. The cost varies depending on the location but is generally calculated as 0.50%-0.75% of the sale price or fair market value of the property, whichever is higher
・Notary Fee - this is a negotiable cost that covers the notarization of the Deed of Absolute Sale and is generally around 1%-2% of the property value
・Capital Gains Tax - this refers to the tax paid by the seller for a successful transaction involving a capital asset. In some instances, the buyer pays this cost when it gets rolled into the selling price. It is calculated as 6% of the gross sale price.
・Moving in Fee and Miscellaneous Expenses - these fees include settling in fees like connecting utilities, homeowner’s association fees, and other miscellaneous expenses incurred during move-in
・Other fees include attorney fees, mortgage insurance, home inspection, title insurance, and surveying fees
Payment and Financing Options
If you prefer to buy your new home through a mortgage plan, you and your partner can apply for a housing loan. The criteria for eligibility include income, age, spouse’s income, dependents, stability and continuity of occupation, loan amount, and credit history.
There are three ways to finance your house loan according to the payment scheme:
・Bank Financing - in the Philippines, banks usually charge 6%-12% interest depending on the agreed period of the loan. The application process is also more rigorous
・Pag-IBIG Housing Loan - this option requires membership to Pag-IBIG and it can offer up to 6 million pesos to finance your house, residential lot, and even condominium
・In-House Financing - this can be availed directly from real estate developers and it usually has a shorter tenure of up to five years only
To learn more about housing loans, click here
Is Owning a House a Good Investment?
Owning a house is an attractive long-term investment because of the factors that can increase the property value over time. If you have a young family, you can take advantage of value appreciation and sell a property you own now for a higher selling price in the future. This will allow you to get a bigger property that can accommodate your growing family.
In addition, your home equity increases as you continue to pay down your mortgage. Home equity pertains to the difference between what you still owe and the actual value of your house. The higher it gets, the more flexibility you get in availing of home equity loans which you can use to make your property more valuable. Experts also say that you must stay in your house for at least 5 years to get back the value of all the money you invested.
Seek Help from Agents and Trusted Developers
The most important step that follows after careful research is seeking help from trusted experts who already know the field. While there are people who can perfectly manage the whole process of home buying on their own, do not hesitate to seek help if you think you need help. What is the minimal agent fee compared to the amount you may lose if you end up getting scammed in the process?
If you want to start looking for the perfect house for you, visit us anytime and we will ensure you find the right one for your family!