PLANNING FOR A HOUSE
By Lee L. de Claro, Assistant Vice President and Head, UCPB Real
Estate Loan Department
Planning to have a house requires very
serious thought. A house is such an expensive investment
that you either use your lifetime savings for it or borrow
sum to finance your purchase. So unless you have tons of cash
to spare, dont just go out and decide on an impulse to get
the first house that catches your fancy. If you do, then you
might end up paying for a mistake and regretting it for the
rest of your life.
Before you even start looking, sit down and
make your "needs" and "wants" list. Write
down the things that you cannot do without, like bedrooms, for
instance, if you have a large family, or a garage if you own
a vehicle. This is your "needs" list.
On your "wants" list, enumerate the
amenities you desire but can do without such as jacuzzi bath
or a garden. Rank the items in the order of their importance
to you and your family.
To get started on making your "needs" and "wants" lists,
ask yourself these three questions: Where will it be? What it
will be? How will I pay for it?
WHERE WILL IT BE?
Location is always an important consideration.
For one, it helps narrow down your choice. And for another, it
eventually determines the long-term value of your investment.
The ideal location is one that does not cramp your lifestyle
and is located in a well-developed neighborhood.
If you have an active social life and cannot
stay put in the house, then you would want a house that is stone's
throw away from the mall or within walking distance of a bistro.
Most likely, the place that would suit you is one in the city.
A city home offers the advantage of being near
everything - movie houses, schools, churches, groceries, hospitals,
even the night spots. The trade-offs are the noise, the pollution,
and the cost. City homes obviously command a premium.
However, if you want to escape to some peace
and quiet after a hard day in the office, check out the suburbs.
The farther you are from the urban centers, the more peace and
quiet you would likely get.
But do not get easily lulled by the seeming
tranquility of a place. Talk to the residents. Find out the real
peace and order situation in the area. You might find yourself
buying in a neighborhood that is as quiet as a convent during
the day but erupts in gunfire and chaos when the sun goes down.
Visit the place at night and see if the streets
are well-lighted. Check out the facilities. Is the water supply
strong and potable? Find out if there's at least a clinic nearby;
you can never tell when you'll have to go to one for an emergency
Like a city home, a suburban residence has its
pros and cons. The drive to the office could take hours and you
may have to wake up very early to beat the traffic.
But then again, think of waking up to the singing
of the birds by your windows or the gentle rustle of leaves as
they dance with the breeze.
WHAT WILL IT BE?
Will it be a condominium? A townhouse? A single-detached
bungalow? A two-story unit? There are numerous styles to choose
from, each with a distinct advantage or disadvantage depending
on how you look at it. What is best for you would depend on how
you live. If you like entertaining at home, then buy something
roomy, preferably one with open design that would allow guest
to spill over from the living room onto the kitchen and out of
A word of caution though: If you don't have
a house help and cannot afford to get one, it will be hell to
keep a big house in order. Then maybe you should consider a bungalow
on a lot with space enough for future expansion.
If you are living alone or just got married,
a townhouse wold be a good start. Remember to check out the next-door
neighbors though before making any down payment; they may have
a child whose idea of fun is playing the stereo full blast in
the dead of the night.
To get started
on making your "needs" and "wants" lists,
ask yourself these three
Where will it be?
What it will be?
How will I pay for it?
HOW WILL I PAY FOR IT?
Will it be in cash? Find out the incentives
for a cash purchase, and negotiate hard for discounts. On a P1.0
million house, even a one percent additional discount would amount
to a substantial sum that you can use for new furnishings.
If you're thinking of taking out a loan, consider
how the amortization will affect your cash flow. Better yet,
compute first your disposable income. List down your monthly
income net of taxes and exclude non-regular earnings. Then total
your expenses for food, clothes, and other basic necessities.
And don't forget to include the school tuition
fees of your children; include in your projection the annual
increases in tuition fees. Be conservative. Dont cut it too close
because there might be emergencies that you have to spend for
that will cause you to miss a monthly payment on your loan. And
when you do, you'll incur penalties.
Once you have computed the amount that you can
afford to spend on amortization, scout around for a financing
institution. Study the offers carefully. Be wary of offers that
entice you with a too-attractive rate on the first year, because
for sure come repricing time you might find yourself in a trap.