The most expensive decision a person will be expected to make is the purchase of a house.
Shelter, as one of the basic needs of man, remains a universal aspiration. Some will work towards buying a home as soon as he is financially independent.
There are many decisions a first-time home buyer will need to make. Start with the following questions – do you want to live in a horizontal — or vertical — community? Can you afford a house with garage and a garden — plus the transportation expenses because of the distance of the house from the work place.
While homeownership seems at least a few years years away, it’s important to financially prepare yourself now. The sooner you start saving for a down payment and the more you understand about financing a home, the better prepared you’ll be when the time comes to start shopping for your dream home.
Here are at least five on saving to buy your dream home:
1. Practice allocating an estimated mortgage payment every month and deposit it in a money market account.
Aside from saving for a deposit, you need to start saving an estimated amount needed to pay off your monthly mortgage, including expected property taxes, insurance, and maintenance costs. You may also consider placing them on money-market mutual funds. Although they earn lower returns than stocks, equity and balanced funds, the returns are arguably better than placing your savings in savings account.
2. Get the family involved in the budget.
Buying your dream home is a team effort, regardless of whether your kids plan to get their own homes in the future. The key to achieving your target savings is by sticking to a budget fully supported by everyone in the household, including the kids. Your dream home could possibly be passed on to the next generation as a vacation home or the future house of one of your kid’s family. If your kids do not have plans to live in it, they can have it leased out and earn rental income in the process.
3. Augment your income.
Thanks to the Internet, more and more Filipinos are using the web to augment their monthly income by either selling goods or offering services online. Before investing your time and energy in a sideline job to augment your income, be sure to ask yourself four questions:
How much in extra income do I want to earn? Am I good at this online job? How much time can I devote to the business/job in a week? How competitive is the industry?
4. Use your starter home to pay for your dream home.
Do you know that you can use your first house to get your dream home? Major banks like Security Bank are now offering home equity loans, which allows home buyers to borrow against the value of their first homes (or equity). You can find out how much you can borrow from the bank by answering a few questions online.
5. Be knowledgeable
When it comes to buying a home, one of the most important things you can do to ensure a smart purchase is to arm yourself with knowledge. Know all the terms and numbers. Understand what they mean and how they work and speak with a financial advisor if you need more explanation.