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Loan Application

Getting a Loan? First Consider Getting A Pre-Qualification.

by Pag-IBIG Financing Admin

This is a very common scenario: Juan thinks he likes the house shown to him by the real estate broker. On impulse, he pays for a reservation fee to hold the property in his favour without even considering how much he has to cover for the down payment. A few days later thinks about mortgage financing.

Can you spot what’s wrong with Juan’s approach to buying?

Most likely than not, this will eventually lead him to losing his reservation fee… down the drain. Poor Juan, he never even knew what he is getting into.

Of course, Juan is not alone. I’ve seen many, many cases like this happen over and over again. I don’t know if it is the excitement of buying a house or just plain ignorance that caused them to be trapped into the deal.

For most of us, real estate is one of the most expensive investments we can make. That is why, many properties are bought in instalments, usually using mortgage loans with a little down payment.

Before you buy a piece of real estate, it helps if know the following:

  1. The Amount of Down Payment you can comfortably shell out.
  2. The Loan Amount you can comfortably shoulder.

Of the two, the second one is far more important because a mortgage loan entails a longer payment period and will probably take toll on your household budget.

The Loan Pre-Qualification Process

Pre-Qualification is an assessment process used to determine how much loan you can get. It can be either informal or formal.

An Informal Pre-Qualification can be done by you or by any real estate agent. This is a really quick-and-dirty method of determining how much you can afford based on the following factors:

  • Your income
  • Outstanding Debt

Since the person doing an informal pre-qualification is not really committed in giving you the loan, what usually happens is the whole process becomes simply an exercise in fantasy. That is, you could bloat your income or lower down your current debt. An ball park figure might come out giving you an idea of how much loan you can afford or you might be granted.

On the other hand, if you are really serious in buying a property, you should get a Formal Pre-Qualification. This process takes a little longer. At the very least, it involves the following:

  • Going to the office of a lending institution (Bank, Pag-IBIG)
  • Having you sign a Loan Application Form
  • You lay down your financial life on paper (your income, other assets, liabilities, outstanding loans, etc)
  • You may be asked some personal questions
  • Submitting some form of income documents
  • Checking On your Credit History

No Guarantee Of Getting A Loan

Take note that getting pre-qualified is not a guarantee that the lending institution will also grant you the loan that you can possibly afford. That involves an entirely different set of assessments.

The fact of the matter is you can pre-qualify yourself if you know the parameters used by the lender in the pre-qualification process.

The advantage of getting a formal pre-qualification is once you apply for a loan, the processing time will be a bit shorter since some preliminary steps have already been done in evaluating you as a loan applicant. The trick is to apply for a loan immediately as soon as you got pre-qualified. If you delay it, then you have to undergo another set of evaluations and a new set of fresh documents will be asked of you.

~~~

This article on Loan Pre-Qualification is written by Carlos Velasco.

Filed Under: Buying Tips, Housing Loans, Real Estate Finance Tagged With: Loan Application, Loan Pre-Qualification, Pre-Qualification, Requirements

Pag-Ibig Housing Loan Requirements

by Pag-IBIG Financing Admin

So you’ve finally decided to invest in real property using Pag-IBIG Housing Loan?

You figured that it’s about time that you apply for that Pag-IBIG Loan after all those years of faithful contributions to the Pag-IBIG Fund.

Now you ask yourself: “What are the requirements to avail of Pag-IBIG Housing Loan?”

There are standard requirements asked from the applicant upon Loan Application and prior to Loan Approval.

Additional requirements will also be asked from the applicant when deemed necessary by the Pag-IBIG Fund.

Documents Required Upon Loan Application

  • Housing Loan Application (HLA) notarized with ID photo – original copy
  • Approved Membership Status Verification Slip (MSVS) – original copy
  • Certified true copy of Transfer Certificate Title (TCT) of the property by the Registry of Deeds (latest title)
  • Photocopy of updated Tax Declaration
  • Location plan and Vicinity map

For Employed Pag-IBIG Members:

  • Notarized Certificate of Employment and Compensation (Pag-IBIG Format)
  • Notarized Certificate of Employment and Compensation (Employer’s Format) and one month latest Pay Slip
  • Income Tax Return/Certificate of Tax Withheld (W2 – Form 2316) and one month latest Pay Slip

For Self-Employed Pag-IBIG Member:

  • Income Tax return (one year) with Audited Financial Statements and Official Receipt of tax payment from Bank
  • DTI Registration
  • Business or Mayor’s Permit

For Pag-IBIG Overseas Program (POP):

  • Employment Contract or Employer’s Certificate of Income, duly certified by the employer (with English translation if in foreign language) or other valid Proof of Income
  • Special Power of Attorney (SPA) notarized prior to date of departure or duly certified and authenticated by the Philippine Embassy or Consulate in the country where the member is staying, for members abroad

See also: Top 5 Things Every OFW Should Know About The New Pag-IBIG Law of 2009

Additional Requirements

pag-ibig housing loan application
Depending on the purpose of your housing loan, Pag-IBIG may ask that you submit the following upon Loan
Application.

Purchase of Lot or Purchase of Residential Unit

  • Contract to Sell Purchase Agreement – original copy.

House Construction or Home Improvement

  • Building Plans, Specifications and Bill of Materials duly signed by the Licensed Civil Engineer or Architect
  • Real Estate Tax Receipt

Refinancing of an Existing Loan

  • Statement of Account on the outstanding balance and also indicating the purpose of the loan
  • Any of the following documents:
    • Official Receipt for the past twelve months
    • Subsidiary Ledger
    • Any proof of payment for the past twelve months

Lot Purchase and House Construction

  • Comply the requirements for lot purchase and for lot construction.

Note: Pag-IBIG Fund reserves the right to require additional requirements
to facilitate the loan evaluation process.

Documents required prior to Loan Release (upon approval)

  • TCT in the name of the borrower with proper mortgage annotation in favor of Pag-IBIG Fund (Owner’s Copy)
  • Certified true copy of TCT in the name of the borrower with proper mortgage annotation in favor of Pag-IBIG Fund (RD’s copy)
  • Photocopy of New Tax Declaration in the name of the Borrower and Updated Tax Receipt
  • Proof of Billing
  • Loan Mortgage Documents
    • Loan and Mortgage Agreement with original RD stamp
    • Notarized Promissory Note
    • Disclosure Statement on Loan Transaction
  • For The Employed Members : Collection Servicing Agreement with Authority to Deduct Loan Amortization or Post – Dated Checks
  • For The Self–Employed Members: Post–Dated Checks

Additional Documents Prior to Loan Release Depending on Loan Purpose

Purchase of Lot or Purchase of Residential Unit:

  • Deed of Absolute Sale with original RD stamp.

House Construction or Home Improvement:

  • Building, Electrical, and Sanitary Permits duly approved by the building officials
  • Occupancy Permit.

~~~

Pag-IBIG Housing Loan Requirements is written by Niel Kyro Jo.

NOTE: Due to a large number of comments on this particular article, any new comment are not allowed anymore.

Filed Under: Housing Loans, Real Estate Finance Tagged With: Documents, Housing Loan, Land Title, Loan Application, Pag-IBIG Loan, Pag-IBIG Mortgage, Requirements, Title, Transfer Certificate Title

Home Financing For The Clueless Buyers

by Pag-IBIG Financing Admin

“What was I thinking?” a home buyer asks himself in disbelief after learning that he cannot actually finance his latest investment in an exclusive subdivision.

What he should have actually asked himself was, “What was I not thinking?”

Buyer Beware

Buyers, buyers, buyers. You should think twice, thrice, a hundred times, before you actually invest in real property.

Yes, you may be too excited to place a reservation on an attractive property perhaps because of the low supply and great demand for your dream house model, a pending price increase, or just because of your plain impulsiveness, but you must think and reflect before investing. A simple mistake in a Million–Peso investment will cost you a lot, and I mean a lot.

To shed light into this almost arcane world of real estate investments, here are some tips that you could utilize to establish how much you can actually afford to shell out to finance your home investment:

Tip #1: Be Honest With Yourself About Your Finances

Review your current financial status and contemplate on your future financial status. You could ask yourself these questions:

  • “How long am I in my current work?”
  • “Am I sure that my work visa will be extended”
  • “Is my employer at least happy with my current performance and would he be willing to extend my contract for a longer term?”
  • “Is my business doing well for the past couple of years?”
  • “Is my Cash Flow showing positive signs or is it indicating a downfall?”

Tip #2: Know The Formula

Planning to finance your investment through installment financing? Let me give you a formula that you can use to determine how much you can safely spend for your investment monthly.

Many financing institutions (banks, mortgage lenders, credit unions, etc) in the country are using this.

M = (I – D) / 3

Where:

M = the monthly payment that you can actually afford
I = your monthly income (plus your co–borrower’s, if any)
D = the monthly payment for any long term debt that you have, if any (example: car loan)

Example: Your monthly salary is PhP 250,000 and you are currently paying a whopping PhP 54,000 per month on your shiny, brand-new car. How much should your monthly real estate investment budget be?

Given:

I = Php 250,000 ; your monthly salary
D = Php 54,000; your car’s monthly amortization

Your maximum monthly budget is…

M = (Php 250,000 – Php 54,000) / 3
M = Php 65,333.33

This means that you have to get the “M” at a high amount so that your be labeled as a “risky borrower.” You wouldn’t want that to happen, right? It would just be demeaning. You see, banks would rather not grant the loan than to do the hassle of property foreclose.

So make sure that “M” results a high value so that bank executives will come knelling down your face while handing you the loan application.

Tip #3: Know The Alternative Financing Schemes

Some developers offer a “Deferred Cash” financing scheme. You might want to avail of this type of financing because it is payable at a short term only, plus it won’t be incurring any interest. Interesting, ain’t it?

Pay a visit to other banks and financial institutions searching for their loan interest rate and what they have to offer in general. Going for the shortest loan term and the lowest interest rate available is generally good for you. You will be saving more this way in the long run.

Again, exercise some common sense before you make any commitment.

So to my future home buyers, always think ahead. Check your savings and cash flow. Anticipate any possible financial problems that may arise in the future and take preventive measures before they happen. As the clichéd adage goes: “A fool and his money are soon parted.”

~~~

Home Financing For the Clueless Buyers is written by Kyro Jo.

Filed Under: Real Estate Finance Tagged With: Deferred Cash, Foreclosure, Home Financing Tips, Loan Application, Loan Tips

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