OWNING YOUR HOUSE TOWARDS FINANCIAL FREEDOM

If you have ever been scared of being homeless, and even more scared of inquiring from who on earth to learn the ways in which to have your own piece of Paradise you can call your very own and worst of all – deathly afraid of going out there to begin the steps to purchasing it – then welcome to the club.

I am and was one of you. If you have conquered the fear – It’s incredible but tell me how you totally outgrew it – because that fear – to this day is real – even for me. But it’s what one does with the fear – that makes the dream – come true.

After you graduate from University – your plans consist of landing a good job to show your parents gratitude for sending you to school and to declare – that it was an investment worth taking.

The ones who got the further ahead in their careers were outwardly praised if not secretly adored. So everyone moves heaven and earth, so to speak to be at their very best. After the career, married life. And then what? Asians are known (this was mostly and predominantly the practices of old which of late – around 15 years back – has been changing at a rapid pace) to stay with their parents bringing in spouses and children into the “ancestral home” as they called it.

If there are more than 3 children, you can imagine how terribly crowded the house would become. No matter how we study psychology and pray that all the members of the extended family get along – there are bound to be disagreements.

Now, I do not advise that you go against tradition. We are only simply saying that – you have a choice. One that could propel your other siblings or the community around you to aspire for the same freedom.

The freedom to owning real estate, making it a home, doing business with it, leasing it out, developing it and so many myriad of combinations.

But, we shall speak here about home ownership, because if we delve deeper into all the others – it would take us as long as you want.

Picture this. Every time you feel sick, or threatened or beaten, or tired or lost – the first impulse is to say – I want to go home.

Well then, let’s make that home conceivable, accessible, and achievable. It is all put to motion with you wanting it first.

And no, this is not a seminar on selling or marketing to you any subdivision. I promise you that.

So we open the door to your dream house. We will in brief outline lay – out the steps towards accomplishment of this endeavor. But, note that in no way does this list need to be followed in exact order. One can do it in different ways – which in a short while will be understood better why.

1^st  step

Find out what your needs are at this point in your life. Do you need a small “bachelor’s pad” ? (For auditory recognition I will use familiar terms and not technical jargons – they are what the industry use – to this day), because you have yet to find your significant other and want or need to establish a career first? Or is it that you are to wed soon and expect to have a child in the year or so after the union? Or maybe you have children in primary school and feel it’s time they each learn to be independent, if only inside the homes, or you’ve decided to transfer permanently to a new city and want a ready to step in house and all you would like to bring with you is your toothbrush? Or perhaps - all your children have grown and are starting lives of their own and you desire to shift to a much friendlier house more suited to your age – no winding stairs, no dark alleys and corners to bump into?  Whatever the season and the reason. Any time is a good time to – go home.

2^nd  Step

After you have assessed what your needs are -

And this takes courage and most of us – start with this step and find ourselves analyzed and paralyzed into doing nothing and decide to stay where we are. Give up the “giant” dream and buy the expensive watch, new car, new home theater entertainment system, travel perhaps instead, and forget about that elusive dream only made for those who have money flowing out of their ears.

But, nothing could be further untrue from that notion.

This is the one step that stops about 90 % of people in their tracks. I don’t blame you. Terror and dread will meet you head-on whenever you take the first step. But this one crucial stride - where you need to trust the one that gave it all. Check the Holy Bible and find endless stories about real estate. The promised land, Nazareth, Bethlehem, why even Noah’s ark was real estate.

And so? check your possible sources of financing. Yes my dear brothers and sisters – you don’t need to be maintaining a huge balance in the bank to pass this step.

If you are employed there are:

The Banks - so many banks are offering low equity (or downpayments and interest rates worldwide are at an all time low)


Your Parents - Arrange for an automatic debit payment from your salaries to their bank accounts for payments. Why, you may even get lower or no interest rates, should you be luck to go through this route.


Housing Plans through your employment. - If you've been with the company for longer than 5 years and is a regular employee and the company offers housing and car loan packages, I'd go for the brand spanking new house first before the car.


For Filipinos:

PAG – IBIG otherwise known as Home Devt. Mutual Fund. – You only need to have been employed and paying 2 years worth of contribution and you can borrow up to 3 million all depending on your age, your last contribution and your assessed capacity to pay. If you have not had 2 years – you can pay the equivalent of 2 years contribution one time and avail of the same home loan. Interest rates are as low as 6% per annum and the payment term as long as 30 years.

GSIS – for government employees. GSIS Subd. is an example of those homeowners.

SSS – Social Security System

Financial institutions – most specifically the banks. Bank interest rates are as low as 7% for a 3 year loan and up to 11 % for a 15 year loan, even longer depending on your age and that of your spouse or co-maker as they call it.

If you are self-employed – all of the above except GSIS can be your sources of financing. All the contact numbers of these institutions are listed. Call them up and ask. Like it’s said. Ask and it shall be given to you. Knock and it shall be opened.

All these will need proof of income from your end. Don’t let this requirement scare you. In lay men’s term – they are only desiring to establish your willingness and capacity to pay. In the end, you wouldn’t want to be getting a house that is much much more than you can actually work to pay for.

Other requirements include but are of course not limited to:

-      Resume/ Bio-Data/ Curriculum Vitae

-      Income tax returns

-      Proof of billing for:

a.   Electricity

b.  Telephone – land, mobile, internet

c.   Cable TV

d.  Water

e.   Other subscriptions

***To establish your residence, regularity in payment longevity

-      Filled up application forms

-      List of assets – chattel (vehicles), electrical appliances, jewelry, other real estate that may already have been bequeathed to you by your parents or you may have bought in the past – farmland, beachfront, commercial, industrial etc. If none, worry not – I started exactly like that – believe it – or not.

-      Character references. This is quite crucial as the person you will list down there will be the person they will call to vouch for you. The background, reputation and track record of this person weighs heavily as well.

Parents, Siblings, Relatives who are willing to lend – backed by all the necessary documents to ensure security, peace of mind, safety, and trust between parties.

3^rd STEP -

I don’t know about you – but when I travel to any place, my first impulse is to check out the supermarket. That’s where I will know if the place is health conscious or modern or hip or trendy. There are so much to be learned there – but that is a completely different topic altogether. Another thing I yearn to see are houses. Maybe it has everything to do with my being exposed to building and moving from one house to another. An empty piece of land turned into a beautiful haven of comfort and delight.

Go out and search for your piece of Paradise. And yes – no matter it changes as you grow older, wiser and further in your career – you can purchase repeatedly. There is no law against buying plenty. But there is a moral or business law as to how you will put it to use.

Do you want to be right smack downtown? Or near but slightly away from all the hustle and bustle. A condo unit (which is really not advisable yet in Davao City) or a townhouse, duplex, a single detached home, or just a vacant lot with which you build your dream home in? This is the time to be creative. To pray and ask the Lord for guidance. To allow your yearnings and desires and visions of coming home a reality.

4^th step

Find a mentor.

5^th step

Assess the advantages over disadvantages to having your own home. This is to illustrate how much you put in leasing a home and seeing nothing of it in value appreciation.

Let’s say you lease a home for P 4,000 a month – that’s P 48,000 a year and P 480,000 in 10 years. Add repairs and renovations you put in – perhaps new cabinetry, a better lavatory, a nicer sink, tiling on the kitchen floor and laundry area – say P 15,000 a year or P 150,000 in 10 years for a total of P 630,000.00 in 10 years. And in 10 years what have you got to show for all that money coming out of your pocket from sheer hard work. Nothing. Now I don’t mean to force anyone to stop renting and just recklessly purchase a house or a property – this is merely to illustrate how P 630,000 could have already bought you your very own.

Leasing has its advantages. Most property owners are good enough to do all sorts of repairs for you – in the end, it’s their property they are maintaining – not yours – so the benefit would ultimately be reaped by them, not you.

Another benefit would be – that you can walk away whenever you choose - to go where? It would be alright if you were a missionary but even missionaries have to settle down sometime soon in their lives.

Now let’s talk about advantages of ownership.

-      Privacy

-      Independence

-      Security

-      A venue to express your creativity

-      A habitat to grow your family

-      A place to begin memories in

-      A source of pride, humility and integrity for all the hard work that you’ve bestowed throughout the years

-      A legacy that your children will follow

-      Sense of well-being

-      Sense of community

-      Financial leverage

-      Financial track record

-      Financial freedom

When all is said and done, you and your spouse or the Lord forbid you alone can sell the place and move to a smaller property and invest the rest of the proceeds in an interest yielding fixed rate investment to finance your golden years.

And then there are others.

Now before I start to wind down this talk, let me just mention SUB PRIME LENDING in the US. Why in 2007, families in America started losing their homes which last year totaled to 3 million homeless and growing. For the supposed greatest economy in the world – this was unprecedented, almost impossible and mind-boggling. For the purpose of illustration let us talk about the average American borrower. Mr. Smith earns $ 3k dollars a month has 1 daughter and a wife who stays home to care for the child. He goes to a bank and after years of perhaps just renting or leasing, he decides he wants to buy a house. A quick check of his credit history will show – he has an outstanding and still accruing credit card debt to the tune of $ 14k because America has been for decades and decades paid mostly and almost singularly – with plastic. Aside from that, his medical insurance doesn’t cover his wife and kids and only offers him limited protection. Now the bank before 2007 was awash with ready sources of financing, when the interest rates on borrowing to purchase houses where at an all-time low - dipping to negatives 1-2-3% even. Yes there are rates as such that, it came to the point when the appraised value of real property was enough for the banks to consider mortgages using purportedly high-value homes as collateral. Ignoring then red flag signals and just looking at Mr. Smith’s monthly pay and the market value at that time of the property the bank lends him at 1% per annum. Long story short – he defaults on payment and after a year is homeless. What just happened here? You might ask – why would we buy a house  here in the Philippines and end up like Mr. Smith. A quick check of the Philippines banking system, specifically home mortgages will show – no matter the corruption that has become systemic in our governments – majority if not all of the banks - never succumb to sub-prime lending. Now you might say – why didn’t Mr. Smith just sell his property to avoid foreclosure collect on the proceeds of the sale, pay the bank and maybe have enough left to enjoy? Because the house he bought which was originally being sold at $ 200k dollars was the collateral he used in which the bank gave him twice that amount in double or even triple mortgages – he now owes the bank $600k dollars for a $200k dollar home. The bank who in turn sold the loan to AIG or other big financial institutions for a profit finds itself saddled with so many of the same stories that even if it tries to sell the property at half the cost of financing it – no one can afford it, or everyone who can afford it has 2,999,000 houses with which to choose from. Now you know what happened to one of the biggest financial institutions of the world AIG? It went bankrupt early this year.

Now this brothers and sisters has not happened, is not happening and yes will not happen to us. Our banks are fundamentally sound and those who started not to be so, were summarily closed by the BSP – you have heard of the many banks in the 90s and early 2000 that were closed due to accepting cash placements and promising interest rates so high it was only a matter of time that they fold up.

The point of that US illustration is to contrast it with the Philippines. Our properties here are undervalued, the banks lend you only and strictly up to 70% of its value. It checks your credit record like you have already defaulted and forecloses and sells at a profit. When you bought property 10-15 years back – I can tell you with certainty – it’s value or price has already doubles, tripled or even quadrupled. When and if you purchase property today (and the right kind of property might I add) I will also tell you with even more certainty that it’s value will double in the next 10-15 years speaking conservatively. Can you really declare the same results for money sunk and paid out to leasing or even money market, time deposit placements, vehicles, jewelries and others? You know the answer to this – I am sure. So prepare to invest in one if not still the only investment that will give you financial freedom – more than anything in the material world.

Everything about it can be completely exciting and fascinating. 

What follows next can be as exhilarating, amazing, stimulating, totally consuming, as it is horrendously frightening, exhausting (mind, body, heart and soul) and almost depleting expedition – but totally fulfilling venture into what once was the great unknown.

Where one is stripped off all preconceptions – replaced by a life altering mindset – the state of mind that – one should be open to the incessant and relentless tides of change – for what’s good for one’s self. And just because it’s a huge shoe to walk into doesn’t mean it cannot be done.

One’s existence is a never-ending process of learning. Diligence can get you somewhere but only courage will get you the prize.

That knowledge acquired can equip you with the right tools to ignite the flames, but only the capacity to be steadfast and relentless can secure realization.

And that I came out of it humbled but wiser, overwhelmed but triumphant, battle scarred but ready to do what I love and love what I do - thinner but robust in enthusiasm and fervor – makes the journey constantly spent on edge worth it all.

Because at the heart of every individual is the burning passion to go home – to an eternal life someday – but whilst here on earth - to every single day reach their highest potential.

And how? Having your own house.