Purchasing a property is a life-long commitment. After years of sweating yourself off to save every single centavo for your dream house, you would not want to put everything to waste by making a misstep along the way.
Since you are putting your hard-earned money on the line, buying a house or condominium unit for the first time can be quite unnerving. So how do you shake that off? By doing research and asking a lot of questions. Here are a few frequently asked questions (FAQs) first-time home buyers have in their minds that we will try to give light to:
Should I buy or rent?
An age-old question. There is no definitive answer to what is the better choice ‘cause it varies from person to person. Buying would be the better option for those who are ready to settle. As mentioned, purchasing a property is a lifetime commitment so if you are looking for a home for the rest of your life, that signals you should buy a home. It also gives you the security of having your own home that will save you from rent.
Should I talk to the bank first?
The short answer would be yes. If you are still undecided or struggling to determine whether you can afford buying a home, banks are there to help you answer any uncertainty in your mind. Banks can also help you crunch the numbers on the financial side of buying a property: how much are you paying for monthly mortgages? How much downpayment can you give? How much should you be earning to afford a house or condominium unit? How much can the bank lend you? All these money matters can be clarified at your bank.
Talking to your bank before anything else also saves you time once you finally decide to secure a property. Knowing everything you need to process your loan will help you determine all documents you need and prepare early on. As mentioned above, pre-approval helps you zero in on properties you actually can afford in terms of price. By the time you have decided which property to get, you just have to submit everything, wait for a few days or weeks for your loan to be approved, and finish the process.
Do I need a real estate agent?
YES. Two heads are better than one even in buying a home. Just like your bank, real estate agents are equipped to help you find the home that suits not only your needs but also your financial situation and your long-term goals. Real estate agents are also there along the way guiding you with all the paperwork needed to secure a property, reading through contracts and documents, and clarifying anything that makes you scratch your head. Real estate agents are the know-it-all when it comes to home buying and will be a short call or message away to answer your questions.
What documents do I need?
Buying a property is notorious for its hefty paperwork, but believe us when we say it can be quite simple. The basic ones are valid IDs and financial documents you would need in processing your loan to prove you can pay for the property such as certificate of employment, income tax return (ITR), and bank statements. A letter of intent (LOI) also kicks off your purchase. It expresses your intent to purchase a property and contains details such as the home’s value, the amount of your down payment, and your preferred payment method and schedule.
In this guide, we listed down all documents you will encounter along the way when you purchase a property.
How long does it take to purchase a property?
Home buying has no definite timeline. The most arduous part of the process is actually searching for the property you will buy and the research it requires. As we have mentioned, getting pre-approved from your bank saves you time and this usually takes just a few days, while approval for the actual loan can go from two weeks to 30 days. Inspecting the property—multiple times, negotiating your contract with your agent and doing all the paperwork involved until closing may take around four to eight weeks.
Do I have to pay anything after closing the property?
YES. After completely paying your home’s mortgage and meeting all conditions in your contract, you will then have to pay for documentary stamp tax (DST) on the Deed of Absolute Sale which amounts to 1.5% of the property’s value. A title registration fee amounting to 0.25% of the home’s value will also have to be paid to the Register of Deeds. Lastly, you are also mandated by the Local Government Code of 1991 to pay for a real property tax (RPT) amounting to 2% of the property’s total assessed value for Metro Manila and 1% for provinces.