Visiting a museum is like a journey into the heart and soul of a place. In the Philippines, Cebu is one of the treasure troves
1. Miscalculating your budgetOne common mistake first-time homebuyers make is diving right into the process without evaluating if the costs fit their budget. This is a risky move because the mortgage can turn out to be too much of a monthly payment, leaving you in a difficult financial situation. Before you start touring houses, assess first your finances and calculate how much amortization you can afford to pay each month. Generally, your monthly dues shouldn’t exceed 28% of your monthly gross income. A good rule of thumb is to make an estimate based on your current income and not on what you expect to earn a few years down the line. Use a mortgage affordability calculator to determine the price range that fits your budget. The goal is to buy a property and get a loan with affordable monthly fees. With home prices continually soaring, sticking to your budget is still your safest option.
2. Not comparing prices and offersEcstatic homebuyers tend to neglect to compare prices before making a purchase. Buying a house is like shopping for a new car or any other valuable item for that matter – it pays to compare offers. Keep in mind that real estate statistics can vary from year to year and rates fluctuate, too. So, be sure to stay in the loop for the latest developments for you to make an informed decision. Since mortgage interest rates and fees differ from lender to lender, it also helps to apply with multiple mortgage companies. According to a study, a borrower could initially save P22,000 in mortgage interests by comparing five lenders. Assess how much you can save in each offer based on the loan’s term, then go for the lender with the lowest rates.
3. Overlooking the pre-approval processMost homebuyers think that pre-approval isn’t beneficial to the mortgage loan application process in any way. This is not entirely true – being pre-approved by your lender could improve your chances of getting the best terms in a loan. If you’re applying for a mortgage loan, you will be asked to submit a credit report. You may also need to present proof of your financial capacity to purchase the property, such as tax returns and financial account statements. Your lender will then evaluate your income documentation, credit report, and debt-to-income ratio to determine whether you qualify for the mortgage. When pre-approved, you will be furnished with a document detailing the amount of money you can borrow to finance your house. It’s important to note that while being pre-qualified doesn’t guarantee you’ll get a loan, it gives you an advantage in the home-buying process. Once your offer is accepted, a mortgage pre-approval letter helps accelerate the paperwork.
4. Depleting your savingsScraping all your money so you can make that down payment is a major blunder. While there’s nothing better than closing a deal, it’s not worth the risk of living on the edge, especially in this time of pandemic where an emergency fund has become all the more necessary. As an alternative, consider building a down payment fund. Cut unnecessary expenses and put the savings into the fund. This will help you make a down payment without draining your bank accounts. You can also take advantage of the reduced interest rates being offered by some real estate companies. Figures on real estate trends show that mortgage interest rates have improved with the lowest interest rate of 5.25% (2021), compared to the 5.88% last year.
5. Skipping home inspectionSome homebuyers fall into the trap of purchasing a property based on visually appealing photos curated on blogs. Others make their decisions based on the initial information presented in marketing collaterals. In many instances, they end up getting frustrated by the property’s actual condition. Marketing materials don’t always give you the whole picture. Hence, it’s recommended that you check the actual property. When in the neighborhood, talk to some homeowners and ask them about their experience living in the area. This practice allows you to have a glimpse of the community and its people. You can also consider hiring a professional inspector. While this may be an added cost, the benefit is worth it because professional inspection allows you to assess and avoid hazards that could put you at risk for illness or injury. You can also negotiate for an adjusted price if there are repairs identified by the inspector.
6. Failing to consider the actual cost of homeownershipAside from the down payment, home-buying involves other costs. However, most first-time homebuyers fail to consider this. They proceed to buy a house without fully evaluating all the charges associated with purchasing a property. The charges can include homeowner’s insurance premiums, regular maintenance payments, attorney’s fees, and association dues. You may also have to pay property taxes on top of your mortgage’s principal and interest amounts. If you plan to purchase a condominium unit, you have to factor in association dues, property taxes, and insurance premiums. If it’s a house, you have to consider additional costs for the upkeep of the property, such as garden maintenance and pool cleaning. When assessing how much you can afford to pay each month, be sure to include all the associated costs in your budget.
Being Informed Helps You Avoid Make Home-Buying MistakesA property is a long-term investment. As such, it’s crucial to carefully assess all aspects of the buying process. It’s also equally important to be aware of the common first-time homebuyer mistakes to avoid making them yourself. If you’re on the hunt for your first property, Mandani Bay is a great investment especially if you’re searching for a condo for sale in Cebu. Our modern units are situated around the vibrant F. E. Zuellig Avenue in Mandaue City, developed using the best practices in sustainable design.
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