Wednesday, March 05, 2008 Osmeña: Home ownership dilemma By Antonio V. OsmeÑa Estatements
UNFORTUNATELY, most of the dwellings that we are accustomed to nowadays fall into the category of houses, not homes.
A house, if well-built, provides the essentials of shelter, and thus gives adequate protection from sun, rain and the actions of the elements. A home, however, is a place which not only provides safety from the elements but offers opportunities for a well-rounded and coordinated family life for character building. It allows the proper upbringing of healthy and happy children.
It is for these reasons that a home is appropriately referred to as a “way of life.”
The recent subprime mortgage crisis in the United States, where home mortgage worth trillions of dollars were foreclosed, is a problem of deep concern to prospective home buyers. Home buyers face the dilemma of how to finance a home and how to derive a mode of payment, which will cause the least strain on the family budget and which will not end in financial grief.
The active marketing campaign of land developers to sell residential units are directed to those more fortunate in their financial standing and who are able and willing to acquire a substantial equity in the home or pay for the whole thing in cash.
Today, a home, like any consumer goods, may be purchased on time; mortgage credit is based largely on stability of future income rather than on accumulated savings. This significant change in the mode of home buying was recognized by lending institutions in accepting the amortization mortgage as best suited to home financing.
As a result of the “pay as you go” home purchase plan, over two-thirds of dwelling units have attained home ownership status. Unfortunately, the “easy” purchase plan has tempted many families into prematurely undertaking the responsibilities that home ownership entails and many, to their sorrow, have learned that home ownership is an important venture and must be carefully planned and timed.
Too often it is not the initial cost but the “upkeep” which causes the amenities or pleasures of home ownership to end in financial grief. Since home ownership is currently and potentially within reach of every income producer who can muster the necessary but relatively small down payment, it is doubly important that careful and thoughtful consideration be given to each and all the principles of home ownership.
Unfortunately, there are special groups or interests that stand to benefit materially from a community of home owners, and their active advertising appears to support the impression that the home owner can “have his cake and eat it too.” Some people have not socially or economically “ripened” to undertake the duties and responsibilities which home ownership necessitates. To illustrate, a young man seeking employment opportunities should be free to move about wherever and whenever opportunity knocks. He should not be tied down by the retarding cares and bonds which home ownership imparts. Even older persons may find ties to a home most burdensome if the nature of their jobs necessitates possible moving about. In the latter class belong sales representatives, field workers of social and national agencies, and others who seek career in the military.
Further consideration should be given to the fact that tenancy not only has its rightful place in our economy, but as a rule, is competitively priced and thus comparable in value per peso to similar home investment or expenditure. The renter will find that his rent includes all the costs of maintenance of the property, such as taxes, interest on the mortgage and depreciation.
Who can afford a home? Definitely, 90 percent of urban average minimum wage earners will not qualify in the cardinal guide to successful home ownership. Under this rule, a person earning P90,000 per annum should limit his search for a home at a price not to exceed 2 ½ times his income so as not to strain the family’s operating budget.
The massive home foreclosure in America is due to failure of lending institution to follow the income rule.
NATIONAL ELECTION. The problems that the Arroyo administration face today could end if Congress moves the national elections to 2009 instead of 2010.
