Lamudi PH offers tips to would-be homebuyers to prepare for ownership
Evaluating and improving one’s own financial situation is the most important, and often overlooked, first step in deciding when to buy a home, online property services company Lamudi Philippines said.
“People often look at the current market standing, the trends in real estate, or the prevailing interest rates set by the Bangko Sentral ng Pilipinas (BSP) before deciding to buy,” Lamudi said. “It is indeed wise to study the market and research for the best real estate deals, but it is definitely much smarter to evaluate yourself and your financial standing first before signing the deed of sale.”
Lamudi offered a number of recommendations as a guide to financial planning for prospective homebuyers, beginning with determining one’s net worth.
“The capacity to buy a house really depends on an individual’s circumstance and goals, and the best way to begin is by identifying your financial capability,” Lamudi explained. “The bigger the (positive) difference between your assets and debts, the nearer you are to your monetary goals.” Lamudi also strongly recommended regularly reviewing one’s financial standing to ensure that progress is being made.
Settling debts, preferably by paying them off, or at least reducing them to an easily manageable level is also critical to being able to take on the financial responsibility of a new home, Lamudi stressed.
“If you have a mountain of loans, try settling all the smaller amounts as quickly as possible,” it suggested. “Alternatively, it might also be best to cover first the loans with the highest interest rates to make sure that they won’t keep earning interests, which can be quite hefty if you add them together.”
Lamudi also suggested that one avoid using credit cards. “Impulsive buying and unplanned purchases are empowered by that mighty plastic card inside your wallet, so better leave it at home,” Lamudi said, explaining that reverting to cash for daily necessities and expenses helps most people stick to a budget and avoid overspending.
The online property firm said that it was important to include a certain amount of funds for “lifestyle spending” in one’s budget, making an allowance for things such as entertainment, eating out, expensive coffee, and “other non-basic necessities.” Lamudi explained, “This way you will not feel deprived as you can still do everything that you love but only in a regimented manner.”
Real estate broker Grace Mendez, many of whose clients are “low- to middle-income families,” agreed with Lamudi’s assessment. “Most of my clients, almost all of them, will mention ‘price’ or ‘low downpayment’ as a reason they’re interested in a particular property,” she said. “But very few first-time buyers have the experience to understand that buying a home is a big, long-term financial commitment.”
Mendez continued, “There are affordable homes for almost everyone, if the buyer is prepared. We don’t want to discourage them, but we want them to be successful, so we try to encourage them to take a look at their situation, to see if they’re really ready. Sometimes they’re not, but sometimes, with a little coaching and taking some time to get things in order, the buyer will discover they can actually afford more than they thought at first. That works out well for everyone.”