Buying Our First Home – Here are Important Questions We Considered!

Growing up, my family never had our house. We’ve always lived in the city and the places we called home were never really our own. For a lower-middle-class family in the Philippines, raising 4 children and getting them through college is an incredible feat in itself. Given this, my parents never had any extra money for additional investments like funding for a house and lot. Rent in the city was expensive enough that owning a property seems nothing but a distant dream.   

Now that all of us kids in the family have graduated and have our own jobs, we’ve looked into finally making that dream of having our own house a reality. For this blog, let me share with you guys a couple of questions that we needed to answer during our home-buying journey. Different people have different needs and preferences. I hope that our journey and the tips I give in this blog would be somehow helpful for when you finally decide to invest in your dream home in the near future.  

1. What kind of house do you want to live in? 

Who are you buying this house for? Is it for yourself only or for your entire family? What are your needs and preferences? How much space do you need? How many rooms would you require? Do you want to live in a single attached or single-detached house, duplex, or maybe a condo unit? It’s a good idea to have all of your preferences or a wishlist for things you want for your house written down. There’s no guarantee that you’ll end up with a house with everything you wanted, but this will totally be a helpful tool in weighing your options to reach for a compromise. 

For our family, we wanted a big house with 6 rooms so that each member would have their own. Two floors would be ideal and we’d like as much space as possible. Simple as our request sounded, the design of the house we found wasn’t perfect. It had 6-rooms but the floor area was only about 80 square meters in total.  

2. Where do you want to live? 

Do you want to live in the city or maybe you’d like somewhere a little less busy? Does your work require you to come into the office? Do you have a car to use for getting around places or are you okay with commuting? Does the location you’re interested in have the establishments that are essential to your lifestyle like groceries, malls, salons, restaurants, and coffee shops? Would you be able to afford the cost of living in that area?

According to this blog post from Lamundi about Manila Real Estate Market Trends for 2022, “studio units for rent” were top-searched on their website during the third and fourth quarters of 2021. More people, primarily aged 25 to 34 were looking for condo units in Metro Manila due to companies calling for Return to the Workplace. Employes were looking for homes closer to their office given the worsening traffic condition in the city.

Buying a house in the city is a bit more extreme. One square meter in Makati City, Philippines’s Business District costs about $5000 or Php. 262,107.50, an estimate from Lilian Real Estate. Most of us in the family do work in the city, but the cost of properties was beyond what we could afford. Since our intention was to buy our own home, we decided to look outside of the city instead because it was cheaper. We chose Cavite because it has numerous options for low-cost housing.

Living in Cavite would mean that for the days that we’d have to go to work, we’d either have to leave home extra early to commute or drive to get to the city. Good thing, my current work allows working from home so I won’t have to travel as much. There are fewer establishments in the area, but that would also mean more open-air spaces and that we’re closer to nature. It would still be best to have my own car to get around though! 

3. How much can you afford?

How much are you earning? Given your current expenses, can you cut out a significant portion of your money for a house every month? Have you been saving and have you garnered a significant amount? Do you have other people to help you out? What are the loans available to you that you could avail to help with your purchase?

I want to share the 28% rule I read in an article from Chase. It states that “you should spend 28% or less of your monthly gross income on your mortgage payment.” You could use this model to start figuring out your budget and start looking for properties that fall within that price range. There are numerous other models out there available that you should consider when figuring out what budget to set. Luckily, there are resources on the internet that computes this for you.

I computed how much mortgage I could afford at https://www.mortgagecalculator.uk/. I didn’t have to do any more mental gymnastics. All I had to do was to input all of the relevant amounts like my salary, additional income, outstanding debts, and downpayment. I could also include the amount other people are willing to pitch in. Their Affordability Calculator will automatically compute the range of the mortgage or housing loan you could be qualified for.

For example only, I had a monthly salary of Php. 25,000 with a 13th-month pay for my day job. A year, I earn about an extra Php 10,000 from my blog. My outstanding debts for the year amount to about Php. 20,000. My sister will also be helping me out so I included her monthly salary of let’s say Php. 30,000 here as well. Let’s estimate that the downpayment of the house is about 15%.

After inputting all of this data, we got the full picture of what mortgage or housing loan we could be qualified for. Given our debt, we could possibly go for properties that fall within this price range: Php 945,000 – 1,447, 500.

Obviously, we had a tight budget so the house we chose was the cheapest option. We wanted a house we won’t have to struggle in paying for every month. Yes, it was great to finally have our own home, but we didn’t want a huge chunk of our salary to go to paying for the house when we had other monthly expenses to consider. We still have to enjoy life, right?

If you don’t find any house you like that falls into the price range you could afford, be patient. You might not be ready now and what you could do is start saving. The more money you have, the better your options are. Don’t rush yourself, but do start saving now.

4. How would you like to buy your house? 

Do you have enough money on hand that you could pay money up-front? Would you like to take out a loan from a bank or the government? Do you plan on looking for houses that are ready for occupancy: a fully furnished house you could move into already? Are thinking of buying land first and then building your house on it? Maybe you’d like to try rent-to-own? You could also go for houses that are on pre-selling. Pre-selling houses get built while you complete the down payment for a couple of years. After a certain period, you can already move in and settle your balance through the amortization of a bank loan.

We availed of a house under pre-selling. The house we reserved wasn’t built yet. While we were completing the downpayment for 15 months, construction was happening at the same time. During this period, we were also applying and sending out documents to different banks to approve our housing loan. By the time we’ve completed our downpayment, our house loan was approved. The bank released the full price of the property directly to the real estate agency, and we would be free to move into the house after inspection. We just have to pay for only monthly amortization for 20 years at 6% interest rate.
 

5. Where do you plan to look for listings? 

Where can you browse through listings for houses and properties that are for sale? Where are reputable websites? Maybe there are Facebook groups with active members that can help you out? Maybe you got friends, relatives, or colleagues with ideas of places you could consider? Talking to professionals like a real estate agent is also a great way of getting answers to all of your questions from a reliable source. 

I was super overwhelmed browsing through several listings online. I didn’t have any knowledge about the real-estate market whatsoever and every house that I found seemed to be a dead end. It was through talking to a real estate agent that I was finally able to get a clearer picture of how buying a house was possible even at the young age of 23.

6. Are you ready to decide?

Take your time to decide and look through as many options as possible. Buying a house is a long commitment not only financially, but personally. Imagine if you’d be willing to live in this house for the rest of your life. Would this house be something you’re proud to pass over to your kids and the other generations to come? Ask the opinions of people you trust and make sure you aren’t making impulse decisions just because of promos and scarcity.

Once you’ve made up your mind, make the first payment. It’s only official once you put your money on it. After that, it all becomes real. The painstaking process of contract signing and getting your documents ready for bank loans and approvals begins!  

7. Are you ready to wait, wait and wait? 

You don’t just buy a house and get it the next day. There’s a certain period when all you have to do is wait and keep paying. Use this time to make plans for your new house. Maybe you’d like to do some renovations, buy more furniture and prepare for anticipated expenses like moving and the installation fees. You can get excited, but make sure you’re also being mindful of your expenses. During this time, you’ll be paying for the house on top of your regular expenses so you must revisit your finances or strickly follow your budget. Maybe you could also start looking for ways how to earn extra income like side hustles or a new job.

Have we moved in yet?

We haven’t moved into this new house yet. We’ve gone through so many steps already, but we’re still waiting. Expect a lot of delays, but trust that all of your hard work will pay off! A house is an investment and its value will appreciate over time. All will be worth it!

Can you imagine that after 30+ years of renting and putting 4 kids through college, our parents could finally have a house they could call their own? We have so many plans for this new house and we haven’t even seen it. I’m looking forward to when I could finally have my own room and have the space and privacy to do my little side projects. There are renovations to be done and a whole new life to get excited for!

If it’s possible for us, there are certainly ways that you could get closer to getting your dream home. It only takes that first step to finally start your own home-buying journey. I wish these questions would guide you in finding your own answers along the way. Hoping you find your way to your new home.

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