Buying a home entails money for the downpayment, which is often at 20% of the total price. Look to the following tips and guidelines to prepare and save up for the cost.
Follow the 20% rule.
The standard downpayment is at 20% of the property's total price. While others yet may offer only 10%, or no downpayment at all, these arrangements often come with steeper rates, as well as monthly fees that add up to cost you more money over time. As such, stick with the 20% standard in order to pay lower interest rates and mortgage fees for your home.
Stick to what you can afford.
Financial experts have a certain rule of thumb when it comes to computing for a home you can afford. Dubbed as the "2.5 rule," it’s a means of estimation by which you multiply your annual income by 2.5, and then select a price range based on the resulting figure. Say, for instance, that your annual income is P480,000. Multiplying P480,000 by 2.5 yields P1,200,000. This means that, as a homebuyer, you should look for a home worth around Php1,200,000 with a downpayment of around P240,000.
Secure a steady source of income.
A home to call your own: it’s likely going to be the most expensive purchase in your life. Even the downpayment can take you years of saving up money. As such, it’s important to secure a steady, reliable source of income that supports your needs and allows you to set aside a decent amount of savings.
Pay off your debt.
Pay off your debt before you commit to a home. Ideally, homebuyers should be debt-free before they start shopping around for a home and a mortgage to go with it. It’s a prudent approach, and a safety measure to boot. Without any debt, you’ll have more money to set aside for your downpayment.
Don’t use up all your money.
Before you shell out the cash, make sure that your downpayment won’t bleed you dry. Even once you’ve saved up enough for the downpayment, a homebuyer must still retain ample funds and capital to his name to support himself and pay off the mortgage for his newly-bought home.