7 Different Ways To Buy Your Own Home

7 Different Ways To Buy Your Own Home
Just like most people, having my own home is one of my life goals.

And usually, when we say that, we think of it as buying a house. That's the dream, at least. But when you start planning for it, you realize it can take many forms.

Superficially that means a choice of House, Condo, or Townhouse (or Duplex). I say superficially, because although you would have your own preference of those choices,what you will really need to prepare for is the way you would acquire it.

Take for example a Condo. If that's you're dream home, there are primarily two ways: pre-selling and bank financing (on the assumption that you're an ordinary-joe, and don't have a few million in cash lying around).

Pre-selling is cheaper, but banks may not be too eager to loan you the money you need. Most banks I've talked to require that the Condo be ready for occupancy.

If it's ready for occupancy, then bank financing is relatively easier to get. But of course, the total price is now higher since the unit is built and you also have to pay interest to the bank.

But that's a simpler choice compared to buying a house and lot.

If  you want to own your own house and lot the "cheapest" way to do so would be to buy the land first, then have a house built. But that's considering only the total price, and assuming you can find a trustworthy contractor who will give you a fair price.

The downside is that if you need bank financing to do so, it takes two separate loans. You'll have to loan (and pay) for the lot, and then for the construction of the house. And with house constructions, you typically need to shoulder the initial cost (typically 30%) and wait for the bank to reimburse you.

An "easier" way is to buy a house that's already built. Easier because it's just one loan from a bank. And if the developer is "accredited" (i.e. one of the big, well-known real estate developers) the appraised value is pretty much what the developer's asking price is.

The downside is that you are also paying more (bank interest + builder's profit).  And if the developer is not accredited (i.e. build-and-sell types; or maybe the former owner) the bank's appraised value may differ from what you have to pay; meaning you'll have to shoulder an even larger portion of the selling price.

But fortunately, if you don't have boatloads of cash just waiting to be spent, there are even more options.

There are rent-to-own properties, assuming you find one you like or is at least in the location you need it to be. I might not be a big fan of rent-to-own scheme, but it's very useful and depending on your situation might just be the answer.

Additionally a lot of developers sell modest houses. They may not be very big, and they may look like every other house in the area, but it's still a home and at least you own it. You can always renovate later. Or "trade-up" by selling it and buying a different property if your financial future changes.

Of course, possibly the most cost-effective way is to buy foreclosed properties. Some might have reservations or misgivings about buying properties that were repossessed by the bank from it's previous owner, but it could also be the most cost-efficient option.

You can find such info form banks (they each have their own "inventory"). It takes some effort, and you really have to know the condition of the property and the neighborhood. You would also need to do your homework and find out what other encumbrance the property comes with. Still, it's at least worth a look.



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photo credit: inane via photopin (license)

4 comments:

  1. In the law firm I used to work for, we had a client that bought bad loans from Pag-ibig and then would sell them at a discount (since it also bought the bad loans at a huge discount). That was the time I discovered the beauty of buying foreclosed properties and if you do your homework, as you said, it really is a cost efficient way to buy property.

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    1. Wow! Would you know how that works? I mean, does Pag-ibig auction those loans? or is it listed somewhere?

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    2. Bahay Financial Services (that's the company I was talking about) buys the bad loans in bulk, that's why they can get a substantial discount. I'm not sure if they had to go through an auction, or if there was an agreement because of the bulk purchase (although if I would guess, I would go with the latter).

      But if you're interested in foreclosed Pag-ibig assets, check out the link here: http://www.pagibigfund.gov.ph/AA/

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    3. I'll check that out:) Thanks, Jill!!!

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