Archive for August, 2010
4 Questions to Ask Before You Buy a Condo
Condominium homes have always been, and will likely always be, an efficient and economical route to becoming a first-time homeowner. They can offer the comfort, prestige, and even luxury appointments that apartment living may lack, often at a cost that is not much different than rent.
However, not all condominiums are the same, however, so make sure you ask your Real Estate Agent the following four questions before you buy:
What will you own? Read the bylaws and be sure you understand what you will be responsible for and what belongs to the condo association. Will you own the boat dock at the back of your unit? Can you elect to build a spa on your patio? Generally, unit owners own and are responsible for the interior of their condos, while costs for outside maintenance including common areas and sewer lines are the association’s responsibility.
Who lives there? Are the majority of residents, owners or renters? Owners generally take more interest in proper maintenance and are more willing than renters to serve on the association board and enforce complex rules and regulations–including the regular collection of homeowner dues.
How effective is the homeowner’s association? Do they have legal counsel, reasonable funds and a capable, caring volunteer board? One way to judge is to check with residents about restrictions, oversight and timeliness of repairs and upgrades. Another is to take a hard look at the grounds and be wary of signs of neglect.
What about special assessments? The association should have the power to special assess for needed, one-time large expenditures. Otherwise, things that need to be done may never get done at all, leaving the complex vulnerable to disrepair and lowered property values.
Don’t miss this great opportunity to become a homeowner or to downsize by buying a condo. Please e-mail me for more tips on buying a condo and feel free to forward this information to any family and friends who may be in the market as well.
Mortgage Options for Home Buyers
While many great deals exist in today’s real estate market, securing the optimal mortgage is a critical part of your home purchase decision.
I have worked with many home buyers over the years and am well versed on the factors in every mortgage loan package that will determine whether or not you can afford the house you want to buy. The most important things to take into consideration are: interest rate, points, mortgage type, closing costs and fees, and down payment and mortgage insurance. Here’s a closer look at each:
- Interest Rate: The interest rate determines the amount of your monthly payment. Keep in mind that different lenders offer different interest rates, so it is important to shop around. Generally, a short-term or adjustable-rate loan will offer a lower interest rate because you agree to repay the lender more quickly or to pay fluctuating rates.
- Points: Points are fees charged by the lender to originate your loan. A point equals one percent of the total mortgage amount. Lenders will charge different numbers of points for different loans, so it is important to understand how many points a lender will be charging. For example, in some cases, lenders may advertise very low interest rates, but build a high point charge into the cost of issuing the loan, making the deal less valuable than a loan at a higher interest rate.
- Types of Mortgage Options:
- Fixed Rate. On a fixed-rate mortgage, the interest rate does not change for the entire life of the loan.
- Adjustable Rate. Adjustable rates, on the other hand, are interest rates that fluctuate based on market conditions. Since no one knows how the market will behave, they are riskier than fixed-rate loans. Over the life of the mortgage, you could end up paying more or less than you would have with a fixed-rate loan.
- Balloon. The next common type of mortgage is a balloon payment loan. A balloon payment loan allows you to make relatively small monthly payments for an initial period, but requires a lump-sum payment toward the end of the term. These are risky to consider unless you are confident that you can either refinance the loan or sell the home at the end of the initial loan period.
- Closing Costs: Closing costs and fees are additional amounts that the buyer and seller must cover during the course of the mortgage loan transaction. They include items like credit report fees, appraisal fees, title search fees and title insurance.
- Down Payment and Mortgage Insurance: When searching for the right type of mortgage for you, the amount of your down payment, the need for private mortgage insurance (PMI) and other factors, such as whether you are a first-time home buyer, a teacher or a peace officer, will also affect your monthly mortgage payment.
A professional real estate agent or a trusted mortgage broker can help you decide what makes the best financial sense for you. Please e-mail me for more information and be sure to pass this on to others who might be in the market for a mortgage.
A recent posting by Jeff Collins and John Lancer to the Orange County Register shows Short Sales are up 74%.
The number of transactions in which a home sells for less than the owner owes the bank is up 74% in the region this year, mainly due to a doubling of those so-called “short sales” in the Inland Empire, the Southern California Multiple Listing Service reported.
|County||Short Sales||% Change|
During the first five months of 2010, the four-county region had 12,906 short sales, up from 7,405 in the same period of 2009, SoCal MLS figures show.
Short sales are increasing as lenders become more amenable to approving deals rather than letting homes go through a costly foreclosure.
Here’s how those numbers break down in Orange, Los Angeles, Riverside and San Bernardino counties:
- Riverside County had 3,444 short sales this year, the second-highest number in the region. That’s up 116% from 2009, when the county had 1,593 short sales.
- San Bernardino County short sales increased 96.7%, to 2,089. During the first five months of 2009, the county had 1,062 short sales.
- Los Angeles County had the most short sales: 4,462, but that’s up just 55.5% from the same period in 2009, when there were 2,870 such sales.
- Orange County had the lowest percentage gain: up 54.8% to 2,911 short sales. The same time last year, O.C. had 1,880 such sales.
- Overall, the region has 29,242 distressed sales this year so far, down 24.4% from the first five months of 2009 due mainly to declining sales of bank-owned homes.
- Bank-owned home sales fell 46.1% to 17,233 this year.
Tips for Buying a Luxury Home
Despite the doom and gloom the media portrays regarding today’s real estate market, several unique opportunities exist for home buyers, in particular, luxury home buyers.
While home prices across the country have dropped or stabilized to varying degrees, luxury home prices have been slashed, in many cases, as the market for such high-end properties has dwindled in challenging economic times. This presents a great opportunity, for those who have the financial resources, to purchase a luxury home that might have been completely out of their range six years ago.
Purchasing a luxury property, however, is unlike a standard home purchase. I advise all my luxury-home clients to consider the following before embarking on their search:
1. Weigh the finances carefully.
Even if you’re ready to pay cash for your luxury home, you still want to ensure you’re getting the best possible value and potential return on investment from your home purchase. Make sure you truly have the financial wherewithal to remain in the home as long as you’d like. Consider the stability and growth potential of your future income before moving forward.
2. Have your documentation in order.
Many luxury home buyers derive their net worth from a variety of sources and investments. Given the high-end purchase price of a luxury home, along with today’s unstable economic climate, prequalification is often necessary when it comes to luxury purchases.
3.Investigate alternative search methods.
The best luxury property deals might not be found through traditional real estate search engines but rather through word of mouth. Make sure you’re working with a professional real estate agent who is well connected and networked in the communities your are considering
4. Seeing is believing.
Expansive square footage, sprawling property, and a bevy of incredible views often make luxury homes difficult to completely capture in photos, videos or virtual tours. A visit in person is an absolute must to make sure you’re not missing any potential details and, conversely, to make sure the property lives up to its image.
5.Consider the future.
Your luxury home investment needs to be carefully considered for the future, in particular your expectations in terms of your return on investment. Most luxury home buyers are buying a lifestyle and don’t intend on flipping their home anytime soon. Given the volatility that still exists in today’s market, make sure you’re not headed into your luxury purchase with unrealistic thoughts of financial gain but rather to enjoy a spectacular home for many years to come.
I would be happy to share more insights and strategies for buying a luxury home. Please feel free to contact me for further information. I also encourage you to forward this email to any family and friends who might also be considering a luxury purchase.