Entering a reservation agreement when buying a house is paramount. Paying earnest money is key to hold the property you like for a specified period until you finish saving for the entire down payment. While its benefit is obvious, it’s not without risks. The fact that the reservation fee is non-refundable should suffice to convince you to thread carefully to avoid paying thousands of pesos for nothing.
To mitigate the risk of entering into a house reservation agreement, most reliable Lancaster New City reviews on sites like Property Survey provide these tips:
Don’t Let Your Emotions Get the Best of You
First of all, avoid reserving a property impulsively. Falling in love with a house, at first sight, isn’t uncommon, but it’s not enough reason to make it off-limits to other buyers for a price. Know everything about the property first; visit the unit, or at least a replica of it, to determine whether it’s as enchanting in real life. The best house-buying decisions are objective so keep your emotions under control.
Negotiate to Spread Out the Down Payment
After paying the reservation fee, you need to settle the entire down payment before you can move to the house. Considering that most housing loans only cover 80% to 90% of property prices, you might have to pay over a hundred thousand pesos to get a green light for occupancy. If you can’t pay for everything upfront, ask your developer to break the down payment into four to six installments.’
Determine Whether You Can Afford the Succeeding Payments
If you have the option to pay the down payment in installments, think about your debt-to-income ratio and the would-be monthly amortization. If the payment is too big to maintain along with your regular payables, you might want to hold off. Failing to keep up with your down payment installments can terminate reservation agreement.
Read the Contract Word for Word
Review the contract thoroughly, and pay extra attention to the grounds for cancellation. Reservation agreements vary from developer to developer, but the usual requirements are loan-counselling attendance, on-time payments, and complete documentation. If you fail to satisfy its requirements, inadvertently or not, it would result in the termination of the agreement.
Signing a reservation agreement comes with responsibility. Its stakes may not equal that of obtaining a mortgage, but it nevertheless requires prudence and diligence, especially when there’s a significant amount of money involved.