Jefanie Genilla
Are you a first-time home buyer?
Do you have plans on buying a home soon? Is this your first time to buy a property? If it is, it would help if you understand some concepts that govern the real estate industry and home loan.
Specifically, these are the seven basic ideas to get started with:
Assessed vs. Appraised Value – Although these two refer to the value of a property, each has a unique take on the overall cost of the home. Assessed value is calculated by multiplying the Fair Market Value (FMV) by the Assessment Level (FMV AL). This value is determined by the local assessor. On the other hand, the Appraised Value is determined by a PRC-licensed real property professional, who will include in the valuation of the potential profit of the property in the coming years.
Profit vs. Equity – Equity refers to the value of the property minus all liabilities tied to it, including the outstanding balance of the loan. Profit is the income the property generates either through rent or resale.
Maceda Law or the Realty Installment Buyer Act (RA 6552) – This law gives buyers who’ve made at least 2 years worth of repayments certain entitlements should she or he defaults in the succeeding payments. Buyers are entitled repay the total due installments within the earned grace period. Apart from that, the seller shall also refund the cash surrender value of the property payments, which is equal to 50% of the total installments made plus 5% additional annually after 5 years of repayments.
Foreclosure – This is the worst thing that can happen to buyers. Foreclosure is a legal method wherein the loan provider takes back the balance of the property by forced selling should the buyer fail to make the necessary payments.
Deed of Sale (DOS) vs. Contract to Sell (CTS) – The Deed of Sale (DOS) is the official transfer of ownership from the owner to the buyer. On the other hand, Contract to Sell (COS) stipulates the obligations of the seller and buyer, wherein the former is meant to accept payments of the property until the latter would have paid it in full at a specified period of time.
Down Payment – Home loan providers will only finance up to a specific percentage of the property’s total value. So they’ll demand upfront money prior to starting the monthly installments. To lower the overall cost of the loan, it’s best to save up as much as you can for the down payment to shorten the loan term and decrease the total interest rate you’re going to pay until it matures.
Monthly Amortization – This is the process wherein you make monthly payments for the principal amount and the interest rate. Consistent payments will ensure you’ll pay off the loan on time.
Owning a house usually tops our life milestones and goals. And if you can’t purchase yours on cash, getting a home loan is the best way to go. By knowing the concepts above, it should be easier for you to find a reliable housing loan provider on your own. But if you like expert help, you can also contact our loan advisers here at LoansolutionsPH for advice and assistance.
