[nonhuman]

My fiancee and I are looking at buying our own place. Ideally, we'd get a house, but our price range right now pretty much limits us to condos unless we want to move out to the suburbs (which we don't).

Does anyone have any tips on what we should know/do about buying a condo?

[Cody Dawg]

You really should clue us in on the area of the world/country you are in?

That might help.

I personally don't think much of condo living and think a home is a much better way to live, but to each his own. I don't like sharing walls and halls with people, being forced to share elevators to get to and from my home, etc.

Even a townhouse with it's own garage and maybe a little patio or yard is better than a condo I think.

But buying anything is better than paying someone else's mortgage.

[nonhuman]

Oh, sorry. We're in Boston. We're looking at places in Cambridge, particularly around Kendall Square, Davis Square, and Inman Square.

I agree that a condo isn't perfect, but many/most of the condos around here are actually better than that. One place we're going to see tomorrow would give us a full floor to ourselves (plus a bit of the floor below), and exclusive roof rights (roof decks are big around here). So parts of our floor would be someone else's ceiling, but that's it.

I would love for us to get a house, but we want to be close to the T so we can easily get into Boston and so Jessi (my fiancee) can get to work out in Lexington. We could afford a house, but if we got one, we'd be far enough out that we'd also have to get a car.

[nonhuman]

I guess the most important thing to understand is mortgages. We haven't really started that process yet (we're only just starting to look), but I take it we want to be pre-approved?

Also, I've been told by several people that we should get a 'buyer's agent'. Ok... How do we do that?

[whgoodman]

When you start to work with a realtor you should specify that she/he should be your agent. i.e. a buyer's agent. There is also paperwork to be signed to that effect. If you work with a seller' agent then the realtor is obligated to tell the seller any information that can put the seller in a better position during negotiations. Basically, a buyer's agent cannot show you any of their own property listings since they most likely signed seller's agent contracts with the sellers.

Your realtor should also be able to explain the various mortgage options available to you in that area. It's probably a good idea to say away from the mortage options that allow you to get into a condo that your income won't support. Things like interest-only loans and short term adjustable rate mortgages can really come back to bite you when the interest rates start to rise as they appear to be doing now. But, that is purely my opinion and you may find that with your situation those types of loans work better for you.

Happy hunting.

Walt

[mitchell_pgh]

Regarding Condos:

Try to purchase in areas where new development is unlikely. It's particularly bad to buy a condo in an area where they may be building numerous other condos.

DC is starting to be saturated with one bedroom condos to that point that some developers have stopped building with the hope that the market will warm up again.

[The Godfather]

Hasn't the house market flattened-out already in the northeast? If so, you may want to keep renting until you can find the the condo you really want.

Get a copy of the condo association rules. Make sure you can live by them and there aren't any ommissions that could be taken advantage of by your neighbours.

Also, make sure you budget for condo fees.

[imitchellg5]

Find out which areas are done being developed due to natural issues like swamp land and things like that. Then find your condo there. It will be a more mature area and more calm. And do get a copy of the condo association rules. See if you know someone who has lived in a condo in that association and get feedback from them.

[DigitalEl]

Originally Posted by hayesk

Get a copy of the condo association rules. Make sure you can live by them and there aren't any ommissions that could be taken advantage of by your neighbours.

That's not The American Way [tm]. Just sign all the documents blindly, then sue the bastards and make everyone else bend to YOUR will.

nonhuman, I don't know how you feel about the Dummies series of How To books, but the "Home Buying For Dummies" book is an excellent general primer. Once you ingest that, you'll be more prepared to ask specific questions and delve deeper into just what you need to know.

Good luck!

[bstone]

I live in a (rented) condo in Harvard Square. A close friend just bought a 2 bedroom in Inman Square. Aint cheap, that's for sure. Houses here are over a million.

[E's Lil Theorem]

Originally Posted by bstone 

I live in a (rented) condo in Harvard Square. A close friend just bought a 2 bedroom in Inman Square. Aint cheap, that's for sure. Houses here are over a million.

There are condos over a million where I live (SF) . Don't get me wrong, the $1MM ones tend to be nice (maybe with a view of the bay, spacious for SF standards, etc.), but they're still condos. It makes me miss San Diego even more since the housing market down there is still affordable (for California standards).

[Sealobo]

i suppose you're doing a mortgage... how much are you leveraging?

and once you get married, will you get a tax break?

[Cody Dawg]

It's unbelievable, but down here where I live in Palm Beach county Florida, 134 $400K home sold out in 5 hours - and that's supposedly a "bottomed out" market.

Marcie DePlaza, division president for GL Homes, said they knew there would be a tremendous demand. Within the first hour-and-a-half, 65 of the 134 units were sold. Final sales figures came in at $50 million.

By 1:45 p.m. the last lot was sold.

Nearly 300 showed up to purchase what GL Homes calls "affordable housing" geared toward teachers, police officers, firefighters and other middle-class workers.

Link

What is amazing is that they considered this "affordable" housing that the builder targeted towards teachers and firefighters - people who make about $50K a year. $50K a year allows someone to buy a $400K home?



Something tells me that the mortgage companies are going to have to be VERY creative with their financing of some of these people.

[wallinbl]

Originally Posted by whgoodman 

When you start to work with a realtor you should specify that she/he should be your agent. i.e. a buyer's agent. There is also paperwork to be signed to that effect.

You can sign all you want, but when it comes down to it, BOTH agents work for the seller and are paid by the seller. Most decent agents will act on behalf of the party they are representing, but the seller is the one paying both agents.

[Cody Dawg]

Like I said once before (somewhere in another thread) get a real estate attorney to go over your purchase. It is a very very wise decision. We did and he saved our bacon in a few situations, especially with respect to the mortgage/financing when he pointed out some indiscrepancies.

[ink]

Originally Posted by Cody Dawg 

It's unbelievable, but down here where I live in Palm Beach county Florida, 134 $400K home sold out in 5 hours - and that's supposedly a "bottomed out" market.

Same thing here. We live in a 1940's - 1950's neighborhood; most of the houses are brick and about 2,000 square feet. There are three homes for sale in the $400k - $500k range right now, which is just ridiculous.

I was in Houston all last week, and you can still buy a brand-new 3,000 square foot home for well under $200k. You have to live in Houston, but if that's where affordable housing is...

[Cody Dawg]

But if a job isn't there it does you no good.

[residentEvil]

Originally Posted by Cody Dawg 

It's unbelievable, but down here where I live in Palm Beach county Florida, 134 $400K home sold out in 5 hours - and that's supposedly a "bottomed out" market.





Link

What is amazing is that they considered this "affordable" housing that the builder targeted towards teachers and firefighters - people who make about $50K a year. $50K a year allows someone to buy a $400K home?



Something tells me that the mortgage companies are going to have to be VERY creative with their financing of some of these people.

several programs are available for fire/police/civil service that get them into homes for real cheap; with lower payments than those with high 700 credit scores and 6 figure plus incomes could ever get.

[The Godfather]

Originally Posted by Cody Dawg 

It's unbelievable, but down here where I live in Palm Beach county Florida, 134 $400K home sold out in 5 hours - and that's supposedly a "bottomed out" market.





Link

What is amazing is that they considered this "affordable" housing that the builder targeted towards teachers and firefighters - people who make about $50K a year. $50K a year allows someone to buy a $400K home?



Something tells me that the mortgage companies are going to have to be VERY creative with their financing of some of these people.

Do you think that the reason those houses make the news is because they are the extreme of the spectrum. The only way that a $50k-a-year person could afford a $400k house is if she was married to another $50k-a-year person. They must have been talking to very high echelon teachers and firefighters too, as they are usually very poorly paid.

[mitchell_pgh]

Is there a "hard fast" rule regarding price. If I make 50K a year for example, should I look for a place not more expensive than 200K?

[Spliffdaddy]

There are no rules, but financial advisors seem to suggest that your home cost no more than 25% of your net income while financed with a 15 year fixed rate mortgage.

[Your Mama]

Originally Posted by Spliffdaddy 

There are no rules, but financial advisors seem to suggest that your home cost no more than 25% of your net income while financed with a 15 year fixed rate mortgage.

That would disqualify 95% of the US population

[itai195]

As far as mortgages go, check out www.mtgprofessor.com lots of good info.

Originally Posted by Spliffdaddy 

There are no rules, but financial advisors seem to suggest that your home cost no more than 25% of your net income while financed with a 15 year fixed rate mortgage.

Not sure this is the case in Boston, tho.

[DeathMan]

Originally Posted by Your Mama 

That would disqualify 95% of the US population

No kidding. The MSN 10 things to do to retire well, or whatever it was said your total mortgage should be less than 2.5 years worth of your gross income. So if I make $60K/yr I shouldn't buy a house for more than $180K, which in my county is impossible. I'd need to make more than $100K/yr to afford the average home listed here, and $80K to buy one in the state.

So we're waiting, working toward increasing income and hoping for the market to relax a little, which has started to.

[Spliffdaddy]

Well, to qualify for a standard (good) mortgage your payment cannot exceed 28% of your income.

Most people don't own their home for more than about 5 years. This makes it difficult to recover the $4-5,000 closing costs along with paying a 6% real estate comission - when it comes time to sell the house.

A lot of people forget about that when they compare renting with buying.

[macroy]

Having just gone through this process last week... I'll put down what I remember (as well as some of the stuff we experienced in the past) - of course, your mileage will vary:

Mortgage:

Its a buyers market, but you still want to be pre-approved. Also, I would go for a large reputable bank, or one that is seen to be very reliable locally. As I said, its a buyers market, but you "CAN" lose a bid if your pre-approval letter is not as good as a potential competitors.

Keep in mind when they tell you what your mortgage is, you need to also add in the tax and insurance cost to it. So, if they say you're mortgage is 1200 a month.... figure to put in another $400-$700 more. The variation depends on tax (which is usually 1% of the assessed value).

The % you are pre-approved for is generall between 25-35% of your net income. The higher your equity/down payment - the more the bank will usually allow. Since the risk to them will drop as your equity increases.

Closing costs - 2-6%. You CAN roll it into your loan, but just keep that in mind that you may still need to walk in to settlement with a check. This is in addition to the 5-15K you'll need to drop for the earnest deposit (the deposit will be credited to you so it will even out at the end). In essence, a 250K house can cost you 265K after its all said and done. Closing costs include lawyer fees, title insurance (loan and equity portion), transfer taxes etc...

PMI - This is a "tax" that is assessed on you if you have less than 20% equity on your property. Some states will drop it if you are a 1st time home buyer. I don't know the % or if it differs by location, but it can be easily figured out if you fall in that catagory. In fact, what you should do is have your realtor or banker (when you find one) do a net sheet (if banker, its a good faith estimate) based on the amount of house you are looking at. You can do it for a range i.e. 400k, 450k, 500k etc... But this will give you an idea of what all of your costs are. Keep in mind this will only be an estimate, the fees that title companies charges always differ.... But it will give you a better idea of what you will need to buy a house, as well as what your monthly mortgage+escrow costs are.

Home Inspection: Have one done. $300-$1000 depending on size. Larger issues you want the seller to fix (structural, plumbing, HVAC). Smaller issues, ask for a credit - you can either keep the cash or make sure its done right. Rember, they're trying to sell... so they will only do enough to fix the problem. But you may want it done right.

Finally - take your time. Find the place that you feel most comfortable in. Don't be pushed into getting a home. Also, a few things to look for - location: obvious, schools: you may not have kids or even plan while here, but schools is one of the primary reasons for the value of a house. I've seen housing complexes right across the street from each other where one was $40K more than the other because they fed into different schools.

[Y3a]

How many wheels do you want on your home? Ever though of a Pleasure Barge? Converted Caboose or Business car?

[Cody Dawg]

macroy is absolutely right.

You know, we bought a new home this summer and it was a shocker.

I thought it was going to be easy to handle financially. After all, we sold our previous home and had equity profit/cash in the bank that I thought was more than enough from the sale of the previous home to cover the purchase of the new home - and have some $$$ left over. After all, we'd sold at what I thought was more than enough to cover the cost of buying the new home - which was the same price as the home we'd sold (we made a little in appreciation on the "older" home and thought we'd move to a slightly bigger house about 10 minutes further west in the suburbs.)

Boy, was I ever wrong.

The down payment, the inspection fees, closing costs, insurance costs (we had to pay insurance up front for one year with the mortgage company we chose), and other little fees here and there added up and added up fast. I was shocked at the final tally. And there are still taxes to pay next month that will be several thousand dollars.

Oh, and down here in the Southeast good luck finding "affordable" home insurance. Many times people have to back out of a sale because of the cost of home insurance.

All I can say is check the cost of home insurance BEFORE you put earnest money down on a home because you may find that when you add the cost of home insurance that you may not qualify for a loan or you'll be short the money needed for the down payment.

Then we moved in and then we had to buy things like window treatments/shades/blinds/drapes. We went the Home Depot/Lowe's do-it-yourself route and it was still shockingly expensive. Foliage for the yard? $1000 is easy to spend on bushes and flowers - figure $150 to $200 for a simple 6 foot tall oak or maple tree - each.

I was shocked at how the supposed "equity" from the sale of the previous home disappeared immediately when buying the new house which was $5000 less than the sale price of the old home.

[scottiB]

Home Inspection: Have one done. $300-$1000 depending on size. Larger issues you want the seller to fix (structural, plumbing, HVAC). Smaller issues, ask for a credit - you can either keep the cash or make sure its done right. Rember, they're trying to sell... so they will only do enough to fix the problem. But you may want it done right.

Quoted for emphasis.

This book is a good primer.

[finboy]

Originally Posted by nonhuman 

Oh, sorry. We're in Boston. We're looking at places in Cambridge, particularly around Kendall Square, Davis Square, and Inman Square.

I agree that a condo isn't perfect, but many/most of the condos around here are actually better than that. One place we're going to see tomorrow would give us a full floor to ourselves (plus a bit of the floor below), and exclusive roof rights (roof decks are big around here). So parts of our floor would be someone else's ceiling, but that's it.

I would love for us to get a house, but we want to be close to the T so we can easily get into Boston and so Jessi (my fiancee) can get to work out in Lexington. We could afford a house, but if we got one, we'd be far enough out that we'd also have to get a car.

If you buy a condo, be sure to find out all you can about the owner's association or whatever mechanism is used to impose restrictions and collect/decide on fees. Maybe even attend a condo board meeting (if they're monthly). If there are lots of vacancies in a particular building, ask yourself why.

A buyer's agent is a real estate type who works FOR YOU. Normally, the agent (even one that you contacted) is presumed to work for the SELLER. The SELLER is normally responsible for paying the commission on the sale (at closing). So, even though you hire an agent, they may not be acting solely on your behalf. This requires some disclosure on their part in most states. Conflicts of interest are especially challenging when they try to sell (as your agent) a house they have listed, or one that is listed by their agency. They cannot simultaneously represent you and the seller, no matter what they say.

It's usally not a big deal. Most of the time, you get a buyers agent (just contact a RE person) to help you look and they do most of the legwork. That's why they make 3% of the selling price at closing. In most places, it's worth it. Especially in a hot market.

Ilyce Glink is a pretty good author on this stuff, and Real Estate for Dummies is OK too. Glink's web site is thinkglink.com

[nonhuman]

Wow, thanks for all the advice guys. We've already talked to one buyer's agent, and she'll be giving us a tour of a bunch of different locations this weekend. And we'll be talking to another agent tonight, so we can get a better idea of what's going on. Then it's off to a mortgage broker tomorrow to talk money (plus one of our friend's mothers is a retired mortgage advisor, so we're going to be talking to her too).

The mortgage is my main concern, really. I have a number of investments that will provide us with a really good down-payment, but I'm self-employeed and have only been doing it for a couple months, so I don't really have much of an earning history to point to (other than my previous job I had in California, of course...). But hopefully with a ~20% down payment it won't be too bad.

[itai195]

You will have to do a no/low documentation loan then nonhuman. My wife is self-employed and they generally want you to have tax returns showing 2 full years of self-employment income. We didn't, so we had to do a low doc loan... We had a great mortgage broker though, who worked with the underwriters closely and showed them all sorts of other documentation regarding my wife's work (e.g. licenses she's had for years, profit/loss statements, etc) and I believe ended up with a competitive interest rate as a result.