Buying a House: a checklist by D.

DID YOU KNOW THAT IF YOU SAVE ABOUT $1,000 A MONTH, YOU CAN BUY A HOUSE WORTH $300K!

If you clicked on my article, it means you’re in the mood to BUY… But keep in mind the following:

  1. The prerequisite: Secure 25% down payment! Oh Oh, I know that’s the hardest part but you can manage to take a part from family, another from your “end of year bonus” and some from skipping one night out per week! Yes my dear, sacrifice is needed in housing as in love as in health.
  2. Manage wisely your budget: If you’re salary is X, then your mortgage should not exceed a 1/3rd of X or else you could find yourself in a mess sooner or later! This is called organized Budgeting and Discipline.
  3. Know your needs: Which location do you prefer to live in? Type of apartment? Which size? How many kids? You may want to remain single forever… Then why not a pure “bachelor/bachelorette” loft?!
  4. Consider extra expenses: Will you be able to afford the expenses that come with owning a home? Furniture, utilities, electricity, property taxes, repairs, homeowner insurance, homeowners’ association fees, maintenance…
  5. Decide if better to build or buy: You are already a land owner and want to develop your own land? Be careful, a home custom-built to your specifications can be costly and make you lose valuable time.
  6. Location, location, location. Take into account traffic especially in Lebanon. Don’t think about the deal itself because a bargain is never really a bargain when located in a bad neighborhood. The value will only rise if located in a strategic area.
  7. Know your loans: A loan rate can look great in an advertisement, but once bankers have drawn you in to the branch office, make sure to understand what will you really pay? There may be extra fees you haven’t considered and they just add up! Shop around for the best rate. (Subsidized loan by BDL, Banque de l’habitat…)
  8. Ask the right questions to your banker: For instance, some programs allow buyers to have smaller down payments. Consider questioning it before jumping in: How long will the grace period be? Will the interest be fixed or variable? Etc.
  9. Choose a decent broker: Not a lot of honest ones out there, most are commission oriented! When you find an honest one stick to him, it’s rare!
  10. Demand a professional home inspection: This is optional but I recommend it! You can send over a professional inspector to make sure all is in order.

OR you can just ignore all the above and keep on renting but bear in mind the daily opportunity cost! Subsidized loans won’t last forever. Time to BUY when everyone else is pessimistic!

Notes:

– The monthly saving calculation was based on “Banque de l’habitat” subsidized loan of 3.5% for a period of 30 years. (However, you can get even a better deal at 3%)
– The maximum loan amount is /800,000,000/LBP
– The interest rate is usually fixed throughout the loan period.
– Customers are exempted from stamp duty & mortgage fees.

 

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