Mama’s Advice on Buying a Property

Two weeks ago, my mother and I had this conversation over the telephone.

me: Ma, my stay with our company dormitory will expire January next year (2008), I have to look for a place as early as now.

mama: So what are your plans, anak?

me: Well, I was thinking maybe, if I can afford it, I’ll buy a house or a condo somewhere near my work.

mama: Do you really think you need to purchase a property? You’re still young, anak, and still mobile.

me: Sayang kasi ang rent money, ma. Maybe if I could get a place with a rent to own scheme? What do you think? Should I rent or buy?

And here’s what my mama told me:

Ask yourself these first: What will be my purpose for the place? How long do I think I will stay there? Do I see myself moving in a few years? Months?

Now, should you decide in acquiring a place you should ask yourself these questions:

1. Will it or does it serve your purpose?
2. What is it’s business potential? Will it be easy to sell or rent out when the time comes that you won’t need it anymore?
3. Is the location good? Does it have any hazards? How are the surroundings? Will it be prone to flooding during rainy season?
4. How about the price of the property? Do you think it is undervalued or overvalued? What were the materials used? Did it use high quality building materials?
5. Who are the builders of the place (if it is new)? Who were the previous owners (if pre-owned)?
6. What are the financing schemes? What are the terms of payment? Is it reasonable? Do you think you will be able to afford the mortgage?

me: Ma, so will I buy now rent first? mama: Assess your cash outflow. Can you afford the monthly amortizations? Will you be able to handle the maintenance costs of your house? Or if you buy a condo, will it still fit your budget if you include the association fees, etc.? You must first assess your capacity to pay or else your property will eat up your salary.

me: Oh, ok. I will ma.

Then, our conversation shifted to something else…

After some thought about the matter, here’s my conclusion. Maybe it’s wiser for me to rent first and wait for the time that I will be able to really afford my own place. (Which I hope will be soon.)

PAG-IBIG Lowers Interest Rate

26th of June 2007, Wednesday

Good news for those planning to acquire their homes through Pag-ibig.

Here’s an Inquirer report (by Cynthia Balana) that caught my eye:

Pag-IBIG Fund lowers loan rates

InquirerLast updated 06:58am (Mla time) 06/27/2007
MANILA, Philippines — The Home Development Mutual Fund, popularly known as the Pag-IBIG Fund, has further lowered the interest rate on housing loans between P300,000 and P750,000 to seven percent, Vice President Noli de Castro said Tuesday.

The time Pag-IBIG cut interest rates on its housing loans was in November 2006.

De Castro, chair of the Housing and Urban Development Coordinating Council, said the rate reduction was meant to make housing truly affordable and accessible to ordinary workers.

He said the latest cut in interest rates targeted members in the middle-income bracket or those earning P16,000 to P20,000 per month.

He said this group constituted 23 percent of the labor force based on the statistics of the National Statistics Office.

“This is the next logical step to take. Remember that in November 2006, we already addressed the affordability issue of the lower income brackets, or 77 percent of the work force, when we reduced the rate from nine to only six percent per annum for a P300,000 housing loan,” De Castro said.

At seven percent, the monthly amortization, including principal and interest, is now down to P4,990 from P6,860 previously for housing loans of P500,000 to P750,000.

De Castro stressed, however, that carrying out “an honest to goodness interest reduction scheme” should also be complemented by streamlined loan requirements.

He directed Pag-IBIG Fund officials to look into the requirements of banks to see how the institution could further improve in this area.

Cynthia D. Balana

Link to the inquirer.net.