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Forget About That Dream House, Buy A Functional House Instead

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Have you ever entertained that thought of buying a home of your own?

If not yet, beware! It’s one of those nasty things that could give you sleepless nights… next only to Facebook.

From the design of the house and the size of the lawn, to the number of rooms and the kind the furniture to buy, we all want to have the best house as much as possible.

Large lawn with a nice garden, a 3-car garage, a relaxing view of the city, friendly neighborhood, spacious living room, sound-proof entertainment room for the guest, large kitchen for the chef in you, close to downtown, and finally just within budget.

There’s just one problem: You can’t have it all – especially if you factor in the money, money, money.

A Dream House Is Good, But…

Whether you like it or not, everything comes with a price. If you want to have a high life and experience the most luxurious living on earth, you have to be ready to pay for it.

Want to buy your dream house?

Sure! But first, wouldn’t it be nice if you reach the level of income that you have been dreaming about?

A Functional House — Your First Home To Call Your Own

house plan - bungalowThe wise buyer keeps everything in proper perspective. You want to be able to enjoy living in your house with your family so that eventually you can call it a home. And at the same time, you don’t want it to be too much of a drain on your finances.

Of course that’s possible. But first you need to wake up from dreaming about your “dream house”. Getting a reality check and thinking about owning a functional house that fits your needs and your budget is far more rewarding.

Second House As Dream House? Yes, Way!

Forget about that dream house, especially if you are just buying your first home. You can always buy that dream house later, or get to build a custom-designed one, once you are able to afford it.

First things first: you need a functional house.

To this end, let the following tips guide you along the way.

Tip #1: Your Budget — Buy A House That You Can Afford.

That means you have to work on your budget. If you are like most real estate buyers, you would probably need a housing loan to purchase the house. Thanks to Pag-IBIG Housing Loan, that should not be a problem.

You need to determine how much you can comfortably set aside each month and send it to the mortgage company – that’s the Pag-IBIG Fund or your favorite bank. A good rule of thumb to follow is that, your monthly amortization should not be more than one-third of your gross income. If you want to be really safe, use Net Income instead of Gross Income — that’s even better. If you are a two-income family, it’s best if you can use just one income to cover the monthly amortization expense.

It may come as a surprise to you, but one of the mistakes made by real estate buyers is buying a house they cannot afford.

Yes, you read it right. It’s possible to buy a house that you can’t afford. And that involves being dishonest about your income and finances. But sooner or later, it’s this kind of buyer who eventually winds up eating the dust and losing the property. Avoid this kind of trick as much as possible.

Tip #2: Location – Accessible, In Good Neighborhood.

Did you know about the top three most important things to consider when buying or investing in a real property?

It’s location, location, location.

That’s called hammering it down your head. And I hope, you’re getting it so far.

A good location is one that is highly accessible to public transportation. This is especially true if you have kids who are going to school.

Another thing to consider is the property’s proximity to the amenities and facilities of your city or town. Are there malls and recreational centers nearby? How far is it from the market?

Take note that a good location could also affect the value of the property. For example, properties that are closer to the business center tend to be priced higher than those farther down the town. You need to strike a balance between this and the budget that you set.

Above all, is the neighborhood safe and flood-free? Buying in a good neighborhood is one of the keys that determine whether your property will go up or go down in value.

Tip #3: House Features and Specifications – Must Be Functional

What is a functional house? Only you have the right answer to that one. After all it has to do with your needs and of those people who will be living there.

Before you even begin taking a look at a house, consider that you have the following nailed down on your list:

  • the number of bedrooms
  • the number of bathrooms and toilets
  • car park
  • single-storey or two-storey?

That’s the basic. You could go on and on with the list — things like the hot and cold shower, built-in cabinets, fancy faucets, etc. Of course, the more you have those, the more price add-ons you can expect. You need to decide at the onset if those things are necessary upon move in or you can do away without them and just have them later on when you are already living in the house.

The best part about following the suggestions above is that you get to enjoy the house and have a peace of mind knowing that you have invested on the right thing.

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“Forget About That Dream House, Buy A Functional House Instead“ is written by Carlos Velasco.

I Won PhP 850,000 in Pabahay ni “Binay” and You Too Can

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Yes, you too can…

…get scammed if you are not very careful.

Let me explain.

I was supposed to be feeling lucky this morning.

The first text message I got was from a friend saying, “Thank You.”

What a lovely day! This is the kind of SMS message I’d like to read first thing in the morning, every morning. I could not be more happy than that.

A single round at the toilet and a quick tooth brush later, then… beep, beep — the Android kind of beep.

Oh, I have a new message.

The second message was an appeal to the greediness in me. The text message goes this way

D/MILLIONAIRE’S CLUB OFFICE OF THE PHILS., nforming u dat ur cel# Won!, in PABAHAY NI “BINAY” 2011!, Worth, Php850,000, DTI-NCR permit# 1603s11, Pls.call me now!!..I’m Atty. VLD.

Note: I intentionally put only the initials of the lawyer’s name (that’s VLD) used by the sender to protect his identity and reputation. I have not heard of the lawyer’s name before I personally believe that the scam artist could be using someone else’s name for obvious reasons.

The message was sent using this number: +639067546784.

I have no reason to apologize exposing that number publicly on this high-traffic website. Whoever you are, shame on you!

Obviously this is scam attempt that has gone high tech, using cellular phones. By the time this article is posted on the website, it should have circulated a thousand times already waiting for its naïve victim who is apt to believe in getting something out of nothing.

Of course, nothing is free nowadays. Or, it’s best to carry that kind of mindset wherever you go.

scam money trap

These scammers might be hoping that out of the thousand messages they send, a few would actually fall prey and send them whatever they are asking, which could be

  • an initial deposit sent through Western Union or whatever.
  • a cell phone load, which is kind of funny for a member of the so called Millionaire’s Club
  • or your credit card information

If you care about your friend or family, please share this article to them so that at least they get warned.

Did I Get Scammed?

Of course not… I mean, not yet.

But, who knows? I could get victimized one of these days. I hope not.

This morning, I won over the scammer. I’m still feeling lucky I have my common sense intact.

So how did I know it was a scam?

Here are some points or defects that I detected from that message.

  1. I Can’ t Win In A Raffle — Why on earth would I win in a raffle I did not even join?
  2. D/MILLIONAIRE’S CLUB OFFICE OF THE PHIL — The Philippine Government is not stupid enough to use that kind of name in any of its agencies.
  3. Erroneous Punctuation Marks — The message sender apparently doesn’t know how to use proper punctuation marks and therefore the whole message is Non-Official.
  4. The cell number — This is just like any ordinary cell phone number. Big companies and government agencies are using specially reserved numbers for official notifications and correspondence.
  5. “Please call me now!” — What? I call you? Wow, here’s a first-class jerk… a member of the Millionaire’s Club, but… he can’t even afford to give me a quick phone call to inform me that I won in a raffle, which I did not even join.

It’s possible that you, or someone you know, could be getting this kind of SMS message.

Again, please share this page to someone you care. You don’t get to see this kind of article in any place.

Another Note: This is a scam alert in general. But since it uses the name “Pabahay Ni Binay”, it gets mentioned here in this website, which is primarily focused on Pag-IBIG Financing. This is in line with our intention of helping our site visitors get educated about the Pag-IBIG Fund and its programs and services.

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This article is written by Carlos Velasco.

How To Check If You Are Qualified For A Pag-IBIG Housing Loan

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“Am I qualified for a Housing Loan?”

This is a recurring question which appears on this website as comments under different articles with different topics. This article is intended to address that question once and for all and also show you some useful tips.

You can actually personally determine if you are eligible for a housing loan based on the following:

  • Your Pag-IBIG Membership
  • Your Age
  • Your Capacity To Pay
  • Other Pag-IBIG Loans

We’ll try to elaborate each one on the succeeding paragraphs.

Your Pag-IBIG Membership Status

You need to remember the following basic requirements for Pag-IBIG Fund Members.

  • You must be an active Pag-IBIG member for at least 2 years and has contributed a minimum of 24 monthly contributions.
  • Both the principal borrowers are subject to the above mentioned requirement.
  • Up to three Pag-IBIG Members may avail of a single housing loan (same collateral) provided they are related within the second civil degree of consanguinity.

Question: Can I pay 24 months one-time and then avail of the Pag-IBIG Home loan immediately?

Answer: Not anymore, the new Pag-IBIG Law of 2009 has changed the rule. But, you may still pay 24-months one time (Pag-IBIG will be more than happy to accept it) and wait for another 24 months to apply. (Other branches will allow you to wait for just 12 months.)

Pag-IBIG Financing Tips on Membership:

For the complete list of document requirements, please check this article.

Your Age

  • You must not be more than 65 years old at the time of loan application.
  • You must not be more than 70 years old at the date of maturity.
  • You must be insurable.

Advanced age really is a hindrance to getting a housing loan. And take note that this is true whether you are using Pag-IBIG or any Bank.

Pag-IBIG Financing Tip: If you can afford it, apply for a housing at a young age.

Your Capacity To Pay

Pag-IBIG Housing Loan InterestAs a general rule, your monthly amortization should not exceed one-third of your gross income. This is the rule used by many financial institutions when qualifying a loan applicant.

But when it comes to Pag-IBIG Financing, your monthly amortization (principal + interest) should not be more than 40% of your Net Disposable Income.

Actually, there is a table that you can use to determine much loan amount you can get given your income, contributions and loan term. To see the Table, please refer to the article on “How Your Income And Contributions Affect Your Housing Loan Entitlement”.

Pag-IBIG Financing Tips:

  • Have your finances in order by saving enough for the Down Payment (or Equity).
  • You need to show some proof of income. Prepare the following documents: Pay Slips, Income Statements, Employment Contract (with indicated salary).
  • Learn about the 5’s of Credit
  • If your income is insufficient, you may take on a relative (within the second civil degree of consanguinity) or your spouse and tack-in your contributions then apply for a housing loan.

Other Pag-IBIG Loans

  • You are only allowed one Housing Loan at a time. If you want to take another one, you have to pay your existing loan.
  • If you have previously availed of the housing loan, make sure that it was not foreclosed, cancelled, bought back, or subjected to dacion en pago.
  • If you have an outstanding Multi-Purpose Loan, your payments must be updated and it must not be in arrears at the time of application.

It is important that you take note of the information presented here before you apply for a housing loan from Pag-IBIG.

And if you are disqualified for some reasons, please remember that Pag-IBIG is not the only Home Financing option available. Or, you may want to try applying again in the future. Your loan application may be approved by that time.

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“How To Check If You Are Qualified For A Pag-IBIG Housing Loan” is written by Carlos Velasco.

Equity, Appraisal And Loan Amount – What You Should Know About These

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Allow me to start off this article by quoting the question recently posted by a visitor of Pag-IBIG Financing Website:

“My husband and I are planning to buy a condo or a townhouse that’s worth P1.5M. We understand that the loanable amount is 3M. But the loan pag ibig can give is based on the monthly income of both husband and wife, is that right? The usual problem that we have is that how to pay for equity…. My question is, can we loan a full amount of 1.5M to Pag ibig so that we don’t have to pay for equity?”

That question is very important because it raises a lot of topics every Pag-IBIG Member should be aware of. Let’s tackle the following as it relates to the article:

  • Equity
  • Appraisal
  • Maximum Loan Amount

Your knowledge on these topics may save you from facing a possible foreclosure – something that you don’t want to happen with your property.

Now, before discussing the above terms, a general introduction on home loan is worth mentioning.

In general, when you apply for a real estate loan, you will be asked to pay for a down payment; say 20% of the appraised value of the property, that’s the standard down payment. The loan amount will actually be based on the appraised amount less the down payment.

To illustrate, assume for a moment that the appraised value is P 1,000,000 and you are asked for a 20% down payment. That means you are to personally raise P 200,000 before you are granted the P 800,000 loan. And if you are qualified for the P 800,000 loan, your monthly amortizations will be used to cover the interest and principal payment against the borrowed amount of P 800,000.

(See also: Mortgage Loan Fundamentals)

Now, back on track…

Equity

pag-ibig housing loanThis is another word for Down Payment, a term mostly used by Banks; Pag-IBIG uses the term equity to mean the same thing.

The equity refers to your stake (or interest) on the property. This concept is very important because, in the eyes of the money lender (Bank or Pag-IBIG Fund), the more equity you have on the property, the more serious you are in paying the loan.

If you initially put down an equity of 20% of the appraised value the property, it means that you own 20% of the property; the other 80% is owned by the money lender. As you pay off your loan, your equity also grows over time.

Appraisal

Pag-IBIG Fund, or any lending institution for that matter, can’t just loan you any amount. They base it, first and foremost, on appraised value of the property and then on your capacity to pay.

Appraisal is simply the process if estimating the value of the property. Take note of the word “estimate,” … however advanced the tools being employed, appraisal is really just an estimate. That’s why it is not uncommon to see that the selling price of the property is very different from the appraised value of the property by a big factor. It would appear that the Seller has a different appraised value of the property he is selling compared to the Lender.

If you are getting a loan, its always the Lender’s Appraisal that determines the price and therefore your loan amount. After all, the flow of money is from them to you.

In the example above, just because the selling price of the condo unit is P 1.5M doesn’t mean that Pag-IBIG will also base it on the P 1.5M. This may be the case for Pag-IBIG accredited projects with their partner developers; otherwise, Pag-IBIG will conduct an appraisal on the property.

Maximum Loan Amount

Okay, you should know by now that Pag-IBIG Fund grants a maximum of P 3M only. That doesn’t mean you are also eligible for a 3-million loan. There are other factors that come into play.

Actually there are two maximum loan amounts that you must be aware of.

#1. Amount based on the appraised value minus your equity. If you are lucky, you will be granted with this amount.

#2 Amount based on your income, in other words, based on your capacity to pay. It goes to say that the bigger your income, the more advantageous on your part, because you are eligible to get a bigger loan amount also.

Don’t miss: Your Income, Contributions and Loan Entitlement.

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“Equity, Appraisal And Loan Amount – What You Should Know About These“ is written by Carlos Velasco.

How Your Income And Contributions Affect Your Housing Loan Entitlement

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In case you are wondering how much loan amount you are entitled, this article intends to address that.

By now, you should already know that the maximum housing loan amount Pag-IBIG can possibly grant to a member is P 3,000,000 while the smallest amount is only P 100,000. And the corresponding interest rate is actually shown at the Right Panel of this website.

Basically, there are two very important factors that affect the loan amount you will be entitled to:

  1. The amount of your contribution
  2. Your Net Disposable Income

Naturally, if you want to avail of a bigger loan amount, you need to increase your contribution and demonstrate that your Net Income is also large enough to cover the monthly amortizations.

These things are easier to understand with the following Tables.

Loan Entitlement Based On Pag-IBIG Contribution

Pag-IBIG Housing Loan Amount Based On Contribution

So looking at the table, if you need, for example, to get a loan amounting to P 2,000,000 your contribution should be P 950 / month. Now PhP 950 /month is easier for most Pag-IBIG Members. Quite frankly, there is no problem in that area.

Special Note to OFWs / POP Members: Since you are contributing in US Dollars, the table essentially means to need to contribute the US Dollar equivalent of that amount in Philippine Peso. As you know, there is a constant swinging of values between these two different currencies so there is also a corresponding adjustment.

Loan Entitlement Based On The Capacity To Pay

Take note of this part and this is very important.

According to the Pag-IBIG Fund Primer on Housing Loan, “A member’s loan entitlement shall be limited to an amount for which the monthly repayment on principal and interest shall not exceed 40% of the member’s net disposable income…”

In other words, the monthly amortization should be less than 40% of your net disposable income.

The following Table should guide you.

Pag-IBIG Housing Loan Net Disposable Income Requirment 1

Pag-IBIG Housing Loan Entitlement Based On Net Disposable Income

For example, if you are looking to get a PhP 1,000,000 loan and plan to pay it in 10 years (monthly amortization is P 12, 398.57 at 8.5% interest per annum), your net disposable income should be PhP 30,996.43 or higher (the higher the better).

So to avoid having problems paying for the property, that means you have to work backwards: Determine your net disposable income first, then buy a property based on the amount of loan that you can comfortably pay.

Let’s see if you really understand the Table shown above.

Question: You are planning to get a Pag-IBIG Housing Loan amounting to P 2,000,000 and pay it in 10 years. How much should your monthly income be?

Answer: Your monthly income should be P 67,467.50 or higher. And your monthly contribution should be P 950.

Additional Notes on Borrower’s Eligibility For Housing Loan

To be eligible for the housing loan, a member should:

  • Be a member for at least 24 months and has remitted at least 24 monthly contributions.
  • Be 65 years old or younger at the time of loan application.
  • Not be more than 70 years old at the maturity date of the loan.
  • Have no outstanding housing loan from Pag-IBIG.
  • Have no Multi-Purpose Loan in arrears at the time of housing loan application.
  • Have no Pag-IBIG Housing Loan that was foreclosed, cancelled, bough back or subjected to dacion en pago.

Related Articles To Check:

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This article on Income, Contributions and Loan Entitlement is written by Carlos Velasco.

5 Great Tips For The First Time Pag-IBIG Home Buyers

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This article is intended for the first-time home buyer who wanted to buy a house using Pag-IBIG Financing.

Maybe you are still single and you already wanted to get a house before getting married. (Well, this was the route that I followed.) Or, maybe you are newly wed and you decided that you want to live separately from your parents. Believe me, there’s no substitute to the feeling that you are living on your own home.

A Pag-IBIG starter home — your first home — may not be the most impressive home in town. That’s okay. Forget about the Joneses. Like your puppy love, don’t ever think that it will become your dream home. Rather, treat it as a nest egg that allows you to slowly build your investment (hedge against inflation) while literally having a roof over your head.

Buying your first home through Pag-IBIG is so easy if you take note of the following tips offered here.

Tip #1: Work With Your Real Estate Professional
By real estate professional, in this context, I’m referring to the real estate broker or agent who is directly selling the house.

House From The Up Movie -- A Nice Starter HomeYou may think that getting the assistance of a real estate agent will make the property more expensive. Whoever told you that must be very ignorant of the whole process.

Here’s what you should know: The real estate professional can’t change the selling price of the property that is owned by the Developer. That is, they can’t markup the price nor can they offer a discount. The selling price and discounts are completely dictated by the Developer’s Marketing Team and the agent can never, ever change that price.

Using a real estate professional right from the start saves you from a lot of headaches associated with the home purchase. For one, the guy is a good source of information such as the following:

  • The project
  • The property
  • The financing schemes
  • Special promotions and discounts
  • The materials used,
  • The move-in process

And if you are using Pag-IBIG Financing, your real estate agent should be able to help you cut through the bureaucracy in the Office.

Tip #2 : Buy A New House

Avoid foreclosure properties or properties that are for assume. Most of these properties are inherently problematic. You don’t want to find yourself catching someone else’s problem, do you?

Many foreclosed properties are so cheap you are tempted to jump on the deal immediately. Not so fast. This may be one of those cases where cheap could actually turn out to be very expensive due to probable renovations. If renovations are needed, we can point you towards reputable contractors like Art Construction.

As much as possible, make sure you are the first owner. Of course, as time goes, newer homes will become harder to find. If that’s the case, make sure that the Land Title is clean.

Tip #3 : Buy From A Legitimate Real Estate Developer

Never, ever deal with a fly-by-night real estate developer. But the crooks have a way of putting on the mask in such a way that you can’t detect the devil’s intentions. Here’s where common sense becomes a useful tool at your disposal.

At the very least, a legitimate Real Estate Developer:

  • Has complete Business Permits and Licenses to operate in that line of business.
  • Issues an Official Receipt from the Bureau of Internal Revenue.

Some good points to keep in mind:

  • Check the track record of the Developer – especially its past projects.
  • Make sure they are accredited by the Pag-IBIG Fund. (only if you intend to use Pag-IBIG Loan)
  • Check the License To Sell and Development Permit – they should have both.

Tip #4 : Make Sure You Have Your Finances In Order

Here’s a handy checklist:

  • You are currently an active Pag-IBIG member with at least 24 months contributions
  • Your employment history is impressive
  • You have enough salary/income to cover the monthly amortization

Related articles:

Tip #5 : Save Enough For The Down Payment

The greatest hurdle most real estates buyer ever faced is coming up with the down payment. Many are surprised when they find they don’t have enough cash to cover the outright cash payment required of them.

The down payment, sometimes called equity, is usually 10% to 30% of the selling price. And almost always, it is to be paid one-time about one month after placing the Reservation Fee. So one of the first problems you should think about is the amount of cash you need to raise for the down payment.

Down Payment Tip: Ask your real estate agent if you can defer the payment of the down payment to, say, 12 months. This should be easier on your pocket.

“5 Great Tips For The First Time Pag-IBIG Home Buyers” is written by Carlos Velasco.