Foreclosure

5 Home Buying Strategies When Money is Tight

So you have been searching for a house to buy in your area? Maybe you have already discovered for yourself that prices could vary depending on many factors such as:

the features and amenities of the subdivision or condo project
the distance from the business district
the quality of schools near the community
the economic activities of the place
the crime rate of the city

and so many others that come into play.

Depending also in which city or town in the Philippines you are looking at, you may have so many projects to choose from or you may only have a few.

But eventually, it still boils down to the question: “Can you afford to buy that house?”

It is very important that you buy the property which you can afford to pay instead of buying one which you will eventually lose when financial disasters strike. This is especially true for the young couples who are just starting out or those whose finances are really tight, but having a home to call their own is a top priority.

( Good read: Are you qualified for Pag-IBIG Housing Loan? )

I believe many Filipinos are in that category. So here are some tips to buying a house on a budget.

1. Save up.

Buying a piece of real estate requires a different approach compared to buying your grocery items. You just can’t use your credit card and hope to live in the house immediately.

There are up-front fees that you need to prepare:

The down payment or equity as they call it. It could range from 5% to 30% of the selling price.
The processing fee, attorney’s fee, and various forms of taxes

Plus, you have to buy some appliances and furniture to put inside that house and turn it into a livable place for your family.

2. Move farther from downtown.

In general, the closer the place is to the downtown area and the business district, the more expensive it is compared to communities located farther away.

So if it doesn’t hurt a lot, you may opt to buy a house farther from that area. Though it could mean that you sacrifice your travel time going from your house to your place of work, this is the kind of trade-off you have to consider.

3. Buy a small house with a large lot.

Which is more important: the house or the lot on which it stands?

Most would agree that it’s the lot or land. You can demolish the house, expand it or turn it into something else, but the land generally stays the same.

A more common technique that you can use is to buy two properties adjacent to each other. One lot would have the house while the other remains vacant for future expansion.

4. Buy “dirt” and clean it up.

fixer upper property philippines — Buying a fixer-upper and doing some repairs may be a good deal.

Dirt here means any of the following:

Fixer-upper properties
House with slight structural problems
Abandoned house
Marginal house

These types of properties are generally cheaper due to the problems they have. But please approach with caution. Make sure that you are really adept at real estate appraisal before trying this technique. A lot of houses need a lot of work put into it and may not be worth the hassle. If you do decide to invest in a property like this, consult a contractor like Chase Construction North West so they can tell you exactly how much money you’re going to have to spend.

5. Buy foreclosure properties

There are different stages of foreclosure and on stage there is an opportunity to find a good deal.

But beware: Buying foreclosure properties requires a lot of hardwork, patience, negotiation skills and a good knowledge of the real estate market. If you lack any of those, just forget about it. Your time is better spent doing something else.

( Check also: Buying Foreclosed Units )

The above home buying tips are just some ideas you can use if money is really tight or you are looking for cheaper properties. Some of those may be useful to you, while others are simply not practical. It’s really up to you to find technique that really fits your situation.

And most importantly, find the best housing loan in the market and use it to finance the property that you want to buy. It’s no use buying a cheap property and get an expensive loan. Remember that, a mortgage loan makes up a large portion of the total cost of acquiring the property.

Home Buying Tips Video Presentation

Here is the ever video presentation of Pag-IBIG Financing. I hope you like it, we will be making more and more of these in the next couple of days to supplement the articles written here in this website.

Enjoy!

Meanwhile if you have some ideas or questions, please use the comment form and send it to us for everyone to answer. Or, follow us on Facebook for an exciting discussion.

3 Stupid Things People Do With Their Mortgage Loan

by Pag-IBIG Financing Admin

You should consider yourself lucky if ever your housing loan application is granted by the Home Development Mutual Fund (or simply Pag-IBIG Fund).

Though it is one of the many benefits available to Pag-IBIG Members, not everyone is privileged enough to qualify for a housing loan.

Getting your housing loan approved simply means…

The Pag-IBIG Fund is investing greatly on you using the money pooled from the other members of the fund just like you. That’s using the power of leverage.
You have passed a very strict qualification process which includes the capacity to pay for the housing loan.
By having your own home, you are helping the country in its nation-building efforts. It is a sign that you are a responsible citizen, too.

But remember this: with your housing loan comes a number of obligations that you have to be responsible for.

And your first responsibility is… TO PAY THE LOAN. When it comes to paying their mortgage, here are the top three stupid things people do that lead them into trouble.

1. Not Knowing Where or How to Pay

This is not so much of an issue if you are an employee in the Philippines and you have arranged a salary-deduction scheme with your employer. After all, they are required by Law to pay a part of your membership contribution (that’s P 100 per month) and remit the whole amount (P 200 in total) to the Pag-IBIG Fund every month (some do it quarterly).

Now, what if salary deduction is not possible? This is the case for many self-employed and OFW members. Well, the surest way is to pay over the counter at the branch where you got the housing loan. You can also pay from companies that are accredited by Pag-IBIG to collect payments for housing loans such as SM Payment Centers, iRemit branches overseas, and branches of Land Bank nationwide. Take however, that the list of accredited companies may change from time to time, so it prudent to check at the Pag-IBIG branch every once in a while. When paying from collecting agencies, always make sure that you keep your Official Receipts or whatever evidence of payment they may issue as proof of the transaction.

2. Not Paying On the Due Date

We recently got a message from a site visitor, which says in part:

“What if i cant continue paying my monthly housing loan? What is the best option to do? Like for example if I have no more work. Can i withdraw my housing loan? if so, can i collect my payments?”

mortgage past due — Don’t make it a habit to not pay your housing loan on time.

As a home buyer, it is your duty to remember the due date of your monthly amortization and to pay it on time. If you pay beyond the due date, Pag-IBIG imposes a penalty for late payment. The penalty may be minimal and affordable, but it is not a good habit to develop. And it would lead into trouble sooner or later. Don’t wait for this to happen.

On a positive note: Pag-IBIG sometimes offers rebates to people who pay their housing loans on or before the due date.

Important note to employees: If you are on a salary deduction, always make sure that your employer is remitting the right amount and at the right time. Lapses on their part may put your account at risk.

3. Allowing Foreclosure To Take Place

It only takes 3 consecutive missed payments against your mortgage before your property may be endorsed for foreclosure. If you ever care about your property at all, I’m telling you, don’t ever allow foreclosure to kick in. It’s very expensive in terms of paying the accumulated interest and penalties. It’s also very stressful emotionally. You’d be wise to prevent this from happening first and foremost.

Well, if you are already deep into this problem, I suggest that you contact immediately the Pag-IBIG branch that handles your account and that granted you the housing loan. One of the ways you save your property is to apply for a restructuring of your loan.

Again, it is worth repeating that a housing loan is a long term commitment and you have an obligation to pay for it. Be responsible.

Top 4 Reasons Why You Should Not Buy A House

by Pag-IBIG Financing Admin

I understand that most of you are visiting this website because, in one way or the other, you are contemplating a home purchase and that you want to use Pag-IBIG Home Loan to finance your investment. Indeed, we have come a long way in explaining the essentials of Pag-IBIG Housing Loan. From home buying preparation to the housing loan process and buying foreclosure units, we have already covered the most important stuff.

This article is a little bit different from the others we have made so far. It’s about not buying a house.

Yes that’s right. This is about NOT BUYING your piece of real estate. There are cases and situations when buying a house is a wrong move. As a matter of fact, there are people who should not even dare to look at a show house on display at a subdivision development or a condominium project. That’s harsh, I know. Bu if you belong to these groups of people, you would eventually thank me for giving that kind of suggestion. I’m doing this so you can keep your sanity intact and your money where it truly belongs: in your bank account.

You should not buy a house if…

1. You are a new kid in town

People do this all the time: they move from one place to another. They relocate to a new city as a result of their work assignment. They have a new business venture from out of town and they decide to move there to live. If you are in this situation, you should not buy a house immediately. Give yourself six months to one year to become familiar with your new place, its landscape, its people, and its political climate. If you are a family man and your wife and kids will be moving with you, you have to involve them in the decision process. Get input from your family members and your friends. You should use your common sense as well as your power for “feeling” a particular place.

Home buying is not like shopping for your grocery items. It takes a keen observation and careful attention to details. In choosing a place to live, you should consider such factors are the flow of traffic, location of schools, where people are shopping, the toxic and noisy areas of town and other similar factors.

My suggestion is for you to rent a place for six months to one year, before you jump into the home buying decision.

2. You can’t personally see the house

Consider the following messages we receive from Overseas Filipino Workers:

“Please help me buy a house in the Philippines. I’m still here in Canada, but I want to have my own house when I go back home for vacation.”
“Can I apply for a housing loan even if I’m here abroad?”
“Can you send me the Form to fill up when buying a condo?”

While it’s possible to buy a property even if you are based overseas, it may not be to your advantage. In fact, it invites a lot of surprises and frustrations later on when you have already made your commitment. Can you actually rely on the map sent to you by the real estate agent? How about the sleek brochures and presentations online on the developer’s website? Do you find them attractive? Can you tell which information and defects are not being shown to you?

Nothing beats actually seeing the property yourself.

3. Your marriage is down the sink

More Home Buying Tips If your Facebook Civil Status says, “Complicated,” you should consider a second opinion, or even third, when deciding to buy a house. Well here’s my short opinion: Don’t buy. Put the reservation money back in your wallet.

There are couples who think that buying a home could somehow save their already dysfunctional relationship since it would require committed efforts from both parties. But isn’t sticking to a commitment the primary reason for the shaky relationship in the first place? While I am not a marriage counselor, I’ve seen enough marriage problems being finally brought up eventually when applying for a loan or transferring the land title to your name.

Like it or not, remember that we still don’t have divorce here in the Philippines. So, think twice before buying your dream house.

4. You are not financially fit to buy

Your home is one of the most expensive items you’ll ever buy in your lifetime. Can you buy in a single spot cash payment? For many of us, that’s unlikely to happen. That’s why we need a mortgage loan. And remember a loan will cost you money. It comes with an obligation you have to keep for a much longer time. Otherwise, the consequences would be dire and stressful.

Think about the 20% to 30% down payment. Where would you get that money? How much loan can you possibly afford to pay on a monthly basis?

(Related article: Income Requirement vs Loan Amount)

Are you aware of the other expenses that you need to prepare? We suggest that you prepare at least another 5% of the cash price for miscellaneous expenses and another 20% or so to buy your furniture and appliances.

Further Notes:

Perhaps for ethical reasons or due to the nature of their business, you probably won’t hear a real estate broker or agent give you any of the advice against buying a real estate. For them it’s always time to buy. But hopefully, after reading this article, you already know much better.

You have to know what you are doing. After all, you’re the one paying for the property.

How To Bid On Foreclosed Real Estate

by Pag-IBIG Financing Admin

“Do you have a list of Pag-IBIG foreclosed properties in Cavite area? Please send me a copy. I’m interested to buy.”

That was from an email we received a long time ago from one of the website visitor. Our usual response to such kind of query is to refer them to the Pag-IBIG Branch in-charge of the area. That is the best way to get an updated list of the recent foreclosed properties in a particular city or town.

Of course, there is an online version which you can find by going to this link:

http://www.pagibigfund.gov.ph/AA/default.aspx

Select from the series of drop-down lists provided on that page the areas on which you are interested to buy. Remember that the search result may not always reflect an updated list of foreclosed properties, but this is a good start. You can always verify by calling or visiting the branch.

Foreclosure Sale in Davao City

pag-IBIG Foreclosure Sale via Public Bidding This article is especially good news to Davao-based Pag-IBIG Fund Members or those who are planning to buy foreclosed properties in Davao City area. The Pag-IBIG Fund Branch in Davao City will be conducting a foreclosure sale by way of public bidding which will be held on April 18, 2012.

If you are not from Davao, this article should give you an idea about the whole process of buying a foreclosed property by bidding on it. Listed below are the set guidelines to make the whole bidding process smooth.

How To Buy or Bid on Pag-IBIG Foreclosed Real Properties

1. Interested buyers are reminded to conduct an investigation and ocular inspection of the properties to determine their actual condition before scheduling bidding.

2. Bidders are required to secure copies of:

instructions to bidders, and
BID FORM from this Department:

Acquired Assets Management and Disposition Unit,
HDMF Davao Branch,
2nd Floor, Pryce Tower Condominium,
Pryce Business Park, J.P. Laurel Avenue, Davao City

3. Each bid shall be submitted in triplicate copies placed in a properly sealed enveloped and addressed to the HDMF Davao Branch Committee on Disposition of Acquired Assets at 9:00 AM on April 18, 2012 at this address:

HDMF Training Room,
3rd Floor, Pryce Tower Condominium,
Pryce Business Park, J.P. Laurel Avenue, Davao City

immediately after which, the said bids shall be opened in the presence of attending bidders.

4. All occupants of the foregoing acquired residential properties shall be given until March 29, 2012 to formalize their offer and shall comply all the requirements not later than April 10, 2012 otherwise, the property they are occupying will be included in the bidding. Occupants may purchase the unit through cash or housing loan:

Provided that back-rentals have been settled and
Provided further that in case of purchase of the subject property through housing loan, the eligibility requirements under the existing housing loan guidelines are met as supported by the Membership Status Verification Slip.

5. Each bid must be accompanied by a Pag-IBIG Fund Receipt (PFR) original copy reflecting payment of the required five percent (5%) minimum deposit computed based on the selling price. Such deposit shall form part of the winning bidder’s down payment or shall be returned to the non-winning bidder without interest upon the completion of the public bidding.

The following articles may also be helpful to you:

~~~
“How To Bid On Foreclosed Real Estate” is written by Carlos Velasco.

Home Loan Restructuring Program

by Pag-IBIG Financing Admin

It all started with delayed or missed payments against the home loan obligation.

Those who have been granted a Housing Loan by the Pag-IBIG Fund should be aware that three (3) missed payments on the monthly amortization could lead to foreclosure — a sort of disaster.

What would you do if your property is on the brink of foreclosure and you are facing financial difficulties as well?

We can’t tell how many of our visitors are into that situations.

If you know someone who is facing foreclosure, or has already defaulted on their amortizations, please help them out by sharing this article. This article could save them, or their house for that matter.

A Visitor’s Comment: “Last year my husband applied for a housing loan and it was approved, but now we have missed more than 3 payments. Is it possible to repay the missed payments and reduce the mortgage term of the loan? What step should we do? Thanks!”

Special Note: Pag-IBIG Fund is currently running a Housing Loan Restructuring and Penalty Condonation Program. The program started last January 2, 2012 and will end June 30, 2012. After June 30, only the loan restructuring will be entertained. Members who have missed paying their monthly amortizations for more than three (3) months may avail of this program.

Condonation means the relief given by law in the payment of penalties, surcharges and a portion of accrued interest to be determined by the Pag-IBIG Fund.

Loan Restructuring refers to a process where the principal terms and conditions of the original loan are modified in accordance with an agreement setting forth a new plan of payment or a schedule of payment on a periodic basis.

Loan Restructuring : Refinancing Under Financial Distress

Pag-IBIG Housing Loan Restructure There are many reasons why borrowers default on their loan payments. Luckily for the Pag-IBIG members, there’s a Loan Restructuring program that they can take advantage of as a remedy to their delinquent accounts.

Here are the benefits of the Loan Restructuring Program:

It allows the home owner to save the property from being taken away from them through the foreclosure process.
It allows the borrower to shorten or lengthen (and thus the term “restructure” ) the term of the loan, whatever is deemed an affordable loan term for him.
Interests and penalties due during the delinquency period could be waived.

Who Can and Who Can’t Apply For the Home Loan Restructuring Program?

Member-borrowers who have not yet availed of any penalty condonation program from any Government Financial Institution, for example, HDMF, GSIS, SSS.
Borrowers who have missed payments on their monthly amortizations for at least 3 months.
Borrowers whose property was already endorsed for foreclosure, but whose redemption period has not yet lapsed.
Borrowers whose property was already foreclosed but the winning bidder is the Pag-IBIG Fund.
Legal heirs of deceased borrowers with unpaid loan balances after application of the proceeds of the Mortgage/Sales Redemption Insurance (MRI/SRI).
Successors-in-interest of borrowers who have assumed the original mortgage as supported by legal documents duly approved by the Fund.

However, Pag-IBIG is very strict against some accounts that should not be eligible to avail of this program. The following accounts are exempted from tapping this benefit:

Any account without a single payment since takeout, including those whose only payment resulted from its deduction from the takeout proceeds.
An account in which the housing unit has been abandoned by the borrower for more than one (1) year from date of delinquency.
An account in which the housing unit is occupied by a third party other than the original registered beneficiary or his/her legal heirs or successors-in-interest.
An account that has been foreclosed and another party is the winning bidder.
An account that has been foreclosed and with expired redemption period.
An account under a Contract-to-Sell that has been cancelled.
An account that has been surrendered to the Fund through Dacion en Pago, the title of which had been consolidated or transferred in the name of the Fund.
A Contract-to-Sell account covered by the developer’s buyback guarantee.

About The New Restructured Housing Loan

The following are among the most important things you should know about the new restructured loan.

Loan Term — The Home Development Mutual Fund offers a very generous loan term of up to 30 years on the newly restructured housing loan. However, it should be noted that the age of the borrower must not be more than 70 by the time the loan matures.

Interest Rate — The interest rate is 12% per annum or the rate of the original loan, whichever is lower and must be applied against the interest-bearing portion of the loan amount.

Penalty — If the borrower fails to pay any amount due on or before the due date he will charged a penalty of one-twentieth of one percent (1/20 of 1%) of the amount due for the month per day of delay.

Repricing — If the original loan amount is more than Three Hundred Thousand Pesos (P300,000.00), the new restricted loan shall be subject to repricing every three years, reckoned from the date of approval of loan restructuring.

Compare This With: The Current Rates of Interest and Penalties of Pag-IBIG Loans

What To Do Next?

If you are now so eager to restructure, please visit the Pag-IBIG Office that has the jurisdiction of your account and possibly your mortgaged property. Inquire about the full details of this program.

Plus, remember that the penalty dues will only be condoned when you apply not later than June 30, 2012. (As far as this current program is concerned.)

After reading this article, I hope that you will share this to a friend who is also a member of the Pag-IBIG Fund just so he/she knows what to do when foreclosure clock begins to tick.

~~~

“Home Loan Restructuring Program” is written by Carlos Velasco.

Foreclosure Properties — To Buy Or Not To Buy? (Part 2 of 2)

by Pag-IBIG Financing Admin

This is the second of a two-part article series on Pag-IBIG Foreclosure. Here we’ll talk about why foreclosure happens and some useful tips on buying foreclosure properties, more specifically, Pag-IBIG foreclosed properties.

(In case you missed Part 1, follow this link.)

Why Foreclosure Happens?

There are endless reasons why foreclosures occur, but basically they all boil down to the following categories.

1. Property Problems. This is perhaps the biggest reason why Pag-IBIG Foreclosures abound. We all know that a lot of Pag-IBIG accredited projects are low cost (read: low-budget) and this leads the developers to resorting to all kinds of dirty tricks just to recover the cost of doing the project.

In Pag-IBIG Subdivisions with high foreclosure rate, it is not uncommon to see the following:

Half-cemented road. You may think they are leave the other half for the next election, but the reality it, the politicians have nothing to do with the project.
Weak structures, sub-standard materials. Houses whose walls are not supported by cables or back doors that are so easy to break any grade school level Karate Kid can do it.
Flooded area. These happen to projects done by fly-by-night developers, the kind of developers who should not be developing subdivisions in the first place.

The list could go on.

Can you blame the buyers if suddenly they stop paying the amortizations and allow the foreclosure clock to just tick? These are reasons enough not to buy in these places even if you see a good deal.

stop pag-ibig fund foreclosure

2. Personal Reasons. People change. Their situations also change. From changing careers to migrating to another country and all else in between, some of life events could drastically affect one’s decision on whether to continue with the property or just let it go.

3. Financial Problems . The money matters no one dares to talk about… until it’s too late.

Disease — We Filipinos are so used to the familiar phrase, “Bawal magkasakit.” It doesn’t require a rocket scientist to figure out that getting sick and being hospitalized for a longer time is really expensive.
Death – If disease is already expensive, death is even more so.
Divorce – Good news: We don’t have divorce here in the Philippines. Bad news: We do have our own strange ways of breaking up a relationship (which should not be made in the first place). Yes, we do break up only after several black eyes are already obvious. Funny huh? Wait until you see what happens to the couple’s real property, which by the way is considered conjugal property

As you can see there are many things and events that could possibly lead to a foreclosure. Therein also lies the problems and opportunities of foreclosure properties.

To Buy Or Not To Buy?

Unfortunately, there is no single best answer. If you know what you are doing and you get lucky enough in choosing a foreclosure property to buy, then good for you. One of the factors foreclosure properties are drawing a lot of interests from buyers, investors and speculators is that their prices appear so very cheap.

However, don’t be misled by the cheap price tag that comes with the property. That Foreclosure property you’re eyeing to buy may contain a bag full of tricks that may not be obvious at first. Always do your homework when considering foreclosure properties.

The following tips should serve as your handy and useful guide when buying a foreclosure.

Uncover the reason of the foreclosure. If possible, meet the owner during the pre-foreclosure stage. You may not get an honest reply, but there are a lot of things you will discover during the conversation.
Get the numbers and do the math. How much is the outstanding balance? What is the monthly amortization? How much was paid so far? What is the selling price? It should be negotiable.
Take a look at the property. Get a second look. Then finally, a third look. Never rely on the map, or the photos or the descriptions of the property. In other words, don’t trust what you are seeing unless it is the property itself. Do some leg work. This process alone is already a potential source of stress, but you have to be aware that this is part of the cheap price you are paying. One of the disadvantages of foreclosure homes is that it is very difficult to inspect what’s inside the house especially if there are still occupants living in the house.

And most importantly, don’t do it alone. Always have a competent lawyer by your side to help you along the way.

“Part 2 of Foreclosure Properties — To Buy Or Not To Buy?“ is written by Carlos Velasco.