Buying a condo for sale in Muntinlupa, Makati, or Mandaluyong is not an overnight decision. It requires circumspection and preparation. After all, taking a housing loan, one of the biggest debts may acquire, is a major responsibility. If you buy a property before you’re truly ready, you might miss a payment and face foreclosure. In the end, you might go back to renting and flushing everything you work hard for down the drain.
To ensure you can afford a condo when you decide to purchase and qualify for a favorable housing loan, do the following 12 months before you apply:
Save a Ton of Money
Just because you can get a loan to buy a piece of real estate doesn’t mean you don’t have to fork over any cash. You’ll be hard-pressed to find a lender who’s willing to finance your condo purchase 100%.
Generally, you’ll be asked to come up with a sum equivalent to anywhere between 10% and 20% of the property’s price. Regardless of the condo you intend to buy or where you wish to buy, one-fifth of any unit’s cost is a lot. If your prospective condo is valued at Php2,000,000, you’d need to pay the developer at least Php200,000 up front.
The down payment isn’t the only expense you need to pay on the spot. Your lender will charge you closing costs before releasing the funds. These extra charges will go to all parties, including the government who will work to process your housing loan and the real estate transaction.
Furthermore, a lender will most likely want to see an adequate amount of money to be left in your bank account after the sale. Having three months’ worth of cash reserves indicates that you can maintain your housing loan payment even if you lose any source of income moving forward. You may need to season the funds to show that they’re legitimately earned and not needed to be touched for a certain period.
Build Your Credit
Creditworthiness is a determining factor in any lender’s decision. Your bank will review your credit report over the last three years to how well you take care of your financial obligations, like credit card bills.
Even if you think that you’re in good standing, make it a point to review your credit report 12 months before your housing loan application. There might be incorrect information in your life, and you need to fix all inaccuracies to avoid any credit score reduction. A high credit score can get you not only qualified but also granted of a relatively low interest rate.
Don’t Get Fired
A housing loan application is really a sales pitch where yourself, as a borrower, is the commodity. But you can’t sell yourself if you can’t prove that you have a stable job. Without a steady flow of income, a lender may doubt your repayment capacity and deny your request. A lender would want to know that you have at least a one-year tenure with your current company.
What you do (and don’t do) now will affect your chances of getting qualified for a housing loan to buy the condo you love. Time is precious, and use it to turn yourself into the perfect borrower any lender would wish to finance.