Your Guide to How Much You Should Have Saved Before Buying Your First Home

ILLUSTRATION War Espejo

Buying your first home is an exciting endeavor, but it can initially be intimidating—after all, where do you start? What’s the process? It’s easy to get lost in real-estate terms and confusing fine print.

Real Living asked licensed real-estate consultant, appraiser, broker, and accredited lecturer Eden Dayrit, REC REA REB, to give a quick guide on how much you should be saving, who to talk to, and what to look out for when buying your first property. 

How Much Do You Really Need Before Buying a Home?

PHOTO BY Unsplash/Yehleen gaffney

For Dayrit, affording a home is two-fold, taking into account sufficient downpayment and manageable amortization. "First-time home buyers should have savings specifically allotted for real-estate purchase, amounting to at least 30% value of the property they wish to acquire. Save at least P1 to 1.5 million for a 5-million worth condo unit," he says. "If you haven't yet, start saving. Maximum monthly amortization usually allowed by any financing institution is about 30 to 40% of your combined household income. If husband and wife earn P100,000/month, expect P30,000 to 40,000 as maximum monthly amortization. A good real estate broker can help you compute the value of real estate you can afford based on these figures."

He also says that a good real estate broker can help you get the best deal through proper negotiation, if you're one of those people who have saved enough to afford purchasing real estate in cash. "Remember, a broker's professional fee is usually paid by the seller, therefore, it is to your best interest to seek representation. Caveat: some brokerages may charge a fixed fee (or % fee) for buyer's representation. Even with fees, I'd argue that this is still part of a good investment. Best to ask first!"

The First Three Things a Person Must Do When Buying Property

PHOTO BY Unsplash/Kam Idris

1. "Get pre-approved by a bank to determine your capacity to pay and make adjustments if your dream home is above your pay grade. This will save you a lot of time and guesswork in determining and checking only homes you can afford.
2. "Make a list of non-negotiables. This includes most ideal location, number of bedrooms/bathrooms, a special area for you for your most-loved hobby, or a home feature that has a sentimental value to you. Now, shorten this list to top two only. This exercise will help you identify what you need in a home that will serve as your criteria in narrowing down listings. This will also give your broker an idea on that one non-negotiable thing you want that should be there in your future home, to be able to help you make your dream a reality.
3. "Take to heart that purchasing a home is an emotional process that will bring out the best and worst in you. A real estate broker can help take out the emotions in the process and help you make good objective decisions. It is in your best interest to have a person handling the dealings with sellers, developers and other brokers to save you from unnecessary heartaches and headaches. Find someone you're comfortable with."

The Fine Print and Other Things to Watch Out For

"Make sure you read and understand all contracts entirely," says Dayrit. "Ask a lot of questions. Have a professional review all documents for you. Check fine print for penalties should you default on payments, additional charges, terms and conditions of agreement, et cetera."

Additionally, watch out for real-estate scams, which Dayrit says can be "easily spotted by conducting proper due diligence." He adds, "There are a lot of articles and videos online that can teach you how to do due diligence. Scams range from ownership issues, to unauthorized selling, to fake documents. As a general rule, if you encounter any hesitation on the seller in providing documents, or answering simple questions pertaining to the property, best to stay away." Steer clear from scams by working with licensed professionals.

Finally, Dayrit reminds first-time buyers that buying a home doesn't "only require financial investment, but also investing a piece of yourself in the process." Dayrit adds, "Be like a sponge, absorbing the know-how while learning the process. Sway with the wind like bamboo, adjusting your beliefs and finances along the way, without breaking your being. Find a trustworthy partner who will lead you on your quest to buy your dream home through his/her expertise and client-focused care. Lastly, enjoy the process. Recognize and celebrate your efforts because every step is a milestone. I promise you'll learn more about yourself than with any other activity."

This story originally appeared on Realliving.com.ph. Minor edits have been made by the SPOT.ph editors.

[ArticleReco:{"articles":["86347","86350","86361","86352"], "widget":"Hot Stories You Might Have Missed"}]

Hey, Spotters! Check us out on Viber to join our Community and subscribe to our Chatbot.

We are now on Quento! Download the app and enjoy more articles and videos from SPOT.ph and other Summit Media websites.

Source: Spot PH