Buying a condo, a townhouse, or a house and lot in these uncertain times require discipline and laser-sharp focus.

The pandemic has, in a way, forced the majority of us to shift priorities. And as such, certain lifelong plans may have been put on pause, especially those that involve time, patience, and money. For people who have already set their sights on a condo for sale, house and lot for sale, or even that cute townhouse for sale, buying a home may need to be put on the burner. In the first few months of the pandemic, life felt too uncertain that proceeding with the plan to invest in a property seemed risky. And with a lackluster economy, making a big purchase seems not a very good idea.

On the other hand, the current state of the economy seems like the pandemic is the best time to make your investment, whether it is your first time or not. According to this article, the young, literate, working population equipped with ample spending power, coupled with the continuous debut of government infrastructures, and the completion dates of some of the hottest properties on the market, it makes sense to take advantage of the current property prices. 

Moreover, land continues to pick up, especially in Metro Manila like Makati, Taguig, Pasig, Mandaluyong, Quezon City, and Alabang, that it makes sense to invest now than wait until the demand for them picks up more as the economy stabilizes. 

Better news about buying a home now? A lot of lenders now are less stringent with loan requirements, which means it is a great time to act quickly and secure your financing to beat the big rush of buyers later.

But is now really a good time to buy a house? The answer depends not only on your will but also on your financial situation. Here are key things you need to do to ensure you are not only ready but also have the financial capability of buying a home.

Get pre-approved for a home loan.

Your preapproval is pretty much a guarantee that you have the financial capacity in buying your future home. Unlike pre-qualification, which is basically a good indication of your creditworthiness and financial capability, preapproval refers to the process of being able to secure funding from a lender or a financial institution. This means that you have a close estimate of how much you can actually borrow to finance your home purchase. 

A preapproval can also mean other things for you. If you are going through a preapproval process with more than one lender, you will be able to shop around and get the best mortgage rates. For some real estate agents, it also makes you an attractive buyer — they will do their very best to assist you throughout the rest of the process until you finally sign the contract to sell.

When shopping according to the total contract price, aim lower.

How low should you go? You should not invest in a home that is three times your annual gross income. To determine this number, simply multiply your monthly salary or income by 12 months, then multiply the number by three. This equation also takes into consideration your downpayment percentages and prevents you from stretching your financial capacity, even if you opt to pay for the entire 20 percent downpayment.

For example, if you earn P30,000 a month, you can buy a home around the one million-peso range. If you are eyeing another more expensive home, you can stretch your budget nowadays to up to five times your annual income, or using our example, P1.8 million range.

Do keep in mind though that just because you are eyeing a home within that range, doesn’t mean you can afford it. If you are aiming for a higher price, this also equates to higher property taxes, maintenance expenses, and other hidden ownership costs.

Have a consistent stream of income.

This may be harder to do in this economy, but it is also what your potential lender will be looking at during the pre-qualification and pre-approval processes. Your lender will want to look at the documentation that you do have the financial capability to pay. And what better documentation to show than your certificate of full-time employment from your employer. If it takes time, some lenders are comfortable with payslips and your recent income tax return (ITR).

What if you are working as a freelancer? Do self-employed folks or those who have worked from home pre-pandemic or are consultants have the opportunity to get approved for a home loan? This blog article says you can as long as you get your finances documented. 

Make sure you are not tied to any other loans or leases.

Paying off both your mortgage and any other existing loans will be a very big burden on your pocket. Settle any existing loans to free up more money that can go to your homebuying budget.

You also need to take into consideration the transition costs as well. If you are buying a house and lot, condo, or townhouse to live in, you have to make sure that you have the budget to cover the costs of your bills in your current home and utility costs in your new home. If you are currently renting, you also have to consider your rent expense as well. Because of the pandemic, your landlord will most likely ask you to honor your lease contract or use up a portion of your deposit as rent so avoid shelling out money.

Save for a down payment and closing costs

The bigger the downpayment, the amount you borrow is lesser. That means your monthly amortization payments are smaller, and you pay lesser interest over the life of your home loan. 

A bigger downpayment also signals your earnestness as a homebuyer, which is an attractive trait in both lenders and real estate agents. It will also pay off in the long run, as you can earn equity faster, and with some lenders, pay extra on mortgage insurance.

Aside from the downpayment, you also need to save up for the closing costs as well. Closing costs are expenses associated with completing your home purchase and are not included in the total contract price.

Saving a downpayment and closing costs may feel overwhelming, but it’s more straightforward when you have a plan. Check out these tips on saving extra. You could opt for mortgage plans with a low minimum downpayment, but it is better to have something to fall back to, especially in these uncertain times.

Spend up to 30% of your income on a monthly mortgage.

Generally, your total housing expenses should not exceed 30% of your take-home pay. This includes your amortization expenses, property taxes, maintenance expenses, and other ownership costs.

Sure, it sounds a whole lot, but historically, homebuyers who bought homes with the minimum downpayment amounts were most likely to default on their home loans. 

If you are planning to buy a home in the next six months, make sure that they are in cash or liquid assets, such as an interest-earning bank account. It is not wise to invest your downpayment in high-risk assets like stocks, especially if you plan to buy your home real soon.

Hire the Right Real Estate Agent For You

Sure, there are plenty of ways for you to start your homebuying journey, and you can even do it on your own. A real estate agent, however, will have your interests throughout the homebuying journey. 

A good real estate agent takes the time to understand your specific needs, then lines up listings that meet those needs, even though if it is not his or her inventory. Moreover, a good real estate is also like a local expert – someone who not only knows the current real estate market but also what properties and locations will bring more value than the current contract price. A good real estate agent will also try his or her best to answer your questions or provide the information you need to make informed decisions.

If you’re unsure where to look for one, you can ask your friends and family for recommendations. Also, do not hesitate to entertain more than one real estate agent. Your communication and further dealings will also help you tell which one serves your needs best.

Will COVID-19 Affect Real Estate Costs After Buying Your Home?

The real estate market depends heavily on where you live. But In general, real estate sales have gone down because of restrictive health policies like social distancing. People are now forced to carry out much of their transactions online, which can be difficult for people who prefer to do things face to face.

The rising unemployment, while prices have remained steady, is also causing buyer anxiety. But if you do have a steady job, we say go for it and take advantage of the current real estate market. But if you have not found the right house and lot, townhouse, or condo for sale, do keep a lookout but make sure you are working on your finances. By the time that you are ready, you can easily go for it without any hesitations or worries.

Check this space for more real estate home buying tips.

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