PLANNING FOR A HOUSE

By Lee L. de Claro, Assistant Vice President and Head, UCPB Real Estate Loan Department

Planning to have a house requires very serious thought. A house is such an expensive investment that you either use your lifetime savings for it or borrow a huge sum to finance your purchase. So unless you have tons of cash to spare, dont just go out and decide on an impulse to get the first house that catches your fancy. If you do, then you might end up paying for a mistake and regretting it for the rest of your life.

Before you even start looking, sit down and make your "needs" and "wants" list. Write down the things that you cannot do without, like bedrooms, for instance, if you have a large family, or a garage if you own a vehicle. This is your "needs" list.

On your "wants" list, enumerate the amenities you desire but can do without such as jacuzzi bath or a garden. Rank the items in the order of their importance to you and your family.

To get started on making your "needs" and "wants" lists, ask yourself these three questions: Where will it be? What it will be? How will I pay for it?

WHERE WILL IT BE?

Location is always an important consideration. For one, it helps narrow down your choice. And for another, it eventually determines the long-term value of your investment. The ideal location is one that does not cramp your lifestyle and is located in a well-developed neighborhood.

If you have an active social life and cannot stay put in the house, then you would want a house that is stone's throw away from the mall or within walking distance of a bistro. Most likely, the place that would suit you is one in the city.

A city home offers the advantage of being near everything - movie houses, schools, churches, groceries, hospitals, even the night spots. The trade-offs are the noise, the pollution, and the cost. City homes obviously command a premium.

However, if you want to escape to some peace and quiet after a hard day in the office, check out the suburbs. The farther you are from the urban centers, the more peace and quiet you would likely get.

But do not get easily lulled by the seeming tranquility of a place. Talk to the residents. Find out the real peace and order situation in the area. You might find yourself buying in a neighborhood that is as quiet as a convent during the day but erupts in gunfire and chaos when the sun goes down.

Visit the place at night and see if the streets are well-lighted. Check out the facilities. Is the water supply strong and potable? Find out if there's at least a clinic nearby; you can never tell when you'll have to go to one for an emergency treatment.

Like a city home, a suburban residence has its pros and cons. The drive to the office could take hours and you may have to wake up very early to beat the traffic.

But then again, think of waking up to the singing of the birds by your windows or the gentle rustle of leaves as they dance with the breeze.
 

WHAT WILL IT BE?

Will it be a condominium? A townhouse? A single-detached bungalow? A two-story unit? There are numerous styles to choose from, each with a distinct advantage or disadvantage depending on how you look at it. What is best for you would depend on how you live. If you like entertaining at home, then buy something roomy, preferably one with open design that would allow guest to spill over from the living room onto the kitchen and out of the deck.

A word of caution though: If you don't have a house help and cannot afford to get one, it will be hell to keep a big house in order. Then maybe you should consider a bungalow on a lot with space enough for future expansion.

If you are living alone or just got married, a townhouse wold be a good start. Remember to check out the next-door neighbors though before making any down payment; they may have a child whose idea of fun is playing the stereo full blast in the dead of the night.

HOW WILL I PAY FOR IT?

Will it be in cash? Find out the incentives for a cash purchase, and negotiate hard for discounts. On a P1.0 million house, even a one percent additional discount would amount to a substantial sum that you can use for new furnishings.

If you're thinking of taking out a loan, consider how the amortization will affect your cash flow. Better yet, compute first your disposable income. List down your monthly income net of taxes and exclude non-regular earnings. Then total your expenses for food, clothes, and other basic necessities.

And don't forget to include the school tuition fees of your children; include in your projection the annual increases in tuition fees. Be conservative. Dont cut it too close because there might be emergencies that you have to spend for that will cause you to miss a monthly payment on your loan. And when you do, you'll incur penalties.

Once you have computed the amount that you can afford to spend on amortization, scout around for a financing institution. Study the offers carefully. Be wary of offers that entice you with a too-attractive rate on the first year, because for sure come repricing time you might find yourself in a trap.