Navigating Mortgage Rates in 2024: What Homebuyers Need to Know?


There’s nothing more fulfilling than having a debt-free investment. Whether it is a car, a house and lot, or a condo investment, it gives you a satisfying feeling that all your hard work has paid off. But such a goal can take too much of your time, money, and effort. You need to have financial capability before you can acquire them. Otherwise, you need other financing options to cater to your investment needs.

Fortunately, most financial institutions and some government agencies offer different types of loans, especially for home financing purposes. However, getting one is not just a walk-in-the-park process. You must have the qualifications needed and financial capability because you’ll have to pay home mortgages based on preferred payment terms.

So before you indulge in any property investment, check out this simple guide about how to easily navigate mortgage rates in 2024.

Understanding Mortgage Meaning

Basically, a mortgage is another term for a loan froma financial institution that allows you to borrow money to buy a home or condos for sale. The lender provides you with the money you need to purchase the property, and you agree to repay the loan, plus interest, over a set period. Now, the property itself also serves as collateral for the loan, meaning that if you default on your payments, the lender can foreclose on the property and sell it to recoup their losses.

How Mortgage Loans Work

Taking out mortgage loans is one of the easiest and fastest ways to buy a property, especially if you don’t have sufficient funds to pay in full.

To get started, you need to get pre-approved for a mortgage to give you an idea of how much you can afford to borrow and strengthen your offer when you find the right property. But first, you’ll need to provide your lender with financial documents like your income tax returns, pay stubs, and bank statements. They’ll use this information to assess your creditworthiness and determine how much you can borrow.

Once you’re pre-approved, you can start searching for your dream home. When you find a property you like, you’ll need to make an offer. Your mortgage lender can help you with this process, too. Lastly, it’s time to close on the deal. This involves signing a bunch of paperwork and paying the closing costs, which can include things like origination fees, title and private mortgage insurance, and property taxes.

7 Common Types of Mortgages

Keep in mind that the best mortgage type for you will depend on your circumstances, financial goals, and risk tolerance. Therefore, it is also crucial to understand the different types of mortgages and compare options from different lenders. So you can carefully assess the terms and conditions, and seek professional advice if needed.

Here are the seven (7) most common types of mortgages available in the Philippines.

Home Purchase Loan

This is a classic choice for financing the acquisition of a house and lot, condominium for sale, or even a vacant lot for building your dream home. It is typically offered with fixed or adjustable interest rates, and loan-to-value (LTV) ratios reaching up to 80 percent. Among the popular options are Pag-IBIG Housing Loans and bank-provided home purchase loans.

Property Construction Loan

This is ideal for those who already own land and want to construct their dream home. The loan amount is usually based on appraised land value and construction plans. Progress payments are released as construction milestones are met.

Refinancing Loan

This type of loan allows you to replace your existing mortgage with a new one, often at a lower interest rate or to consolidate multiple loans. Thus, it can free up your cash flow or extend your loan term for easier mortgage payments. However, this also requires good credit standing and equity in your property.

Home Equity Loan

A home equity loan lets you tap into the built-up equity in your existing home to access cash for various purposes, such as renovations, education, or debt consolidation. So, it is secured by your home, offering lower interest rates compared to personal loans. But it also comes with risks like potential foreclosure if you default on even one monthly mortgage payment.

Home Improvement Loan

This type of mortgage loan is designed specifically for financing home improvement projects, like renovations, repairs, or upgrades. It has shorter loan terms and higher interest rates compared to home purchase loans. Plus, it may require less documentation and offer quicker approval processes.

Fixed-rate Mortgage

The interest rate remains constant throughout the loan term, offering predictable monthly payments and stability. This is the most popular type, especially for long-term borrowers who prioritize stability.

Adjustable-rate Mortgage (ARM)

The interest rate starts at a fixed rate for an initial period and then adjusts periodically based on a benchmark interest rate. ARMs can offer lower initial rates than fixed-rate mortgages, but carry the risk of future interest rate increases.

Easy Tips on How to Navigate Mortgage Rates in 2024

Of course, navigating mortgage rates in 2024 can make you feel like steering a ship through choppy waters. But with the right tips and resources, you can find the best value-for-money condo with compact living features as well.

Here are some strategies to help you navigate the mortgage landscape.

Be Familiar with Local Trends

Stay informed about Philippine economic indicators and central bank policies as they directly affect interest rates, so understanding their decisions empowers you. Hence, you must track historical real estate trends in Philippine mortgage rates to provide valuable insights into past rate fluctuations and potential future directions.

Compare and Conquer

Don’t settle for the first offer. Get quotes from at least 3-5 different lenders, including banks, Pag-IBIG, and online platforms. You can utilize online comparison tools that allow you to compare rates and terms from various lenders side-by-side. You can also consider non-traditional lenders. Credit unions and cooperatives may offer competitive rates and flexible terms, especially for investment starter condo buyers.

Optimize your Credit Score

Note that your credit score is crucial in securing the best rates. So, practice responsible credit habits. Pay bills on time, maintain low credit utilization, and avoid unnecessary inquiries. Consider also credit counseling if needed to help improve your financial health and credit score.

Understand Your Options

Explore different mortgage types and their benefits. Fixed-rate mortgages offer stability, while adjustable-rate mortgages (ARMs) may be initially cheaper, but carry future rate change risk.

But, you can also consider government-backed loans like Pag-IBIG Housing Loans since they offer lower interest rates and down payments, although they may have stricter eligibility requirements.

Don’t Be Afraid to Negotiate

When it comes to mortgages, don’t shy away from negotiating the down payment, interest rates and fees with different lenders. Your good credit score and strong financial standing can give you leverage. But, always be prepared to compare offers and express your willingness to switch lenders for a better deal. As a result, this can also potentially save you significant costs over the loan term.

While it can be a great achievement to own a house and lot property, taking yourself into a more practical way to secure one of the modern condominiums can be an ideal option. Asterra, for one, offers condo price Philippines at competitive rates with amenities where active and leisure lifestyles meet.

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