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Updated over 17 years ago, 08/02/2007
First time buyer.
Hi everyone,
My name is Tiffany I’m from Cocoa beach and I’m interested in purchasing a home or condo. I don’t really have a mentor figure to help me a long the way, so I was hoping I could get some advice from here.
I signed up for my real-estate licenses a few weeks back and my classes start 4/27, one of my question is, would it be wiser to wait until I have competed the class to purchase a home, to obtain somewhat of an advantage when working with a realtor.
I’m scared I’m going to get taken advantage of, due to the lack of knowledge in the purchasing a home. I’m not really sure how to calculate my monthly payments, insurance, and whatever else needs to be added in.
Could someone help me please?
Tiffany.
PS: I would be happy to provide you with any personal info needed to help me along my journey towards buying a new home.
Originally posted by "Tiffany":
Could someone help me please?
PS: I would be happy to provide you with any personal info needed to help me along my journey towards buying a new home.
Reasonable Fear is good--it'll help keep you on your toes, asking questions until you're comfortable... Don't be giving personal info out to just anybody who asks. Personal info is probably not going to help us help you, possibly other than to have a very general idea of your credit rating. If it's good, that puts you ina different catagory than if it's not good. Different ratings will get you different responses. If it's bad, for instance, you will probably be told to clean it up first.
To calculate your monthly payments, you basically need to know the purchase price and a few other things. I think there are calculators here, I haven't used them because one of my favorites is Hugh's "what's missing calculator" at
http://www.hughchou.org/calc/missing.cgi You need to know:
Payments Per Year
Loan Amount
Periodic Payment*
Annual Interest Rate
Number of Payments
and it'll tell you wha't missing:
Ex.
Payments Per Year 12 (one a month)
Loan Amount 80,000 (how much are you borrowing? I used
$80,000 for this example)
Periodic Payment* ??????? unknown
Annual Interest Rate 6.85 (another guess--your mtg agent will tell you
how much interest you are paying-- again,
this is an example)
Number of Payments 360 (number of payments in a 30 year loan)
so, your monthly Principle and Interest payments would be $524.21
To figure your taxes and insurance on top of that, you call your local tax assessor, tell them you are considering pruchasing proprety # xxxyyyzzz
and if you do, what will your yearly taxes be. They can tell you. If they Guess, use that amount, and add a bit more on top of that. Divide that number by 12 (months in a year) and add that to the P&I. Now you need to find out the insurance. Call some insurance companies and ask them how much ins will cost for that property, and again divide by 12, and add that to the monthly PIT (Principal, Interest, Tax) amount for the PITI.
If this will be a rental, you need to add in property management--often 10% of the rent amount, AND maintenance, yard/landscaping, any utilities YOU pay, etc.
So now, your monthly payments will be several hundred dollars more that P&I. Will the amount you can collect in rent cover that and still give you a few hundred dollars in your pocket each month?
Ofgift,
Thank you for the help. I should exemplify a little deeper in regards to my state of employment. I currently work for United Space Allies as an IT manager. I’m quite fed up with my position and would like to start my own company.
So, I was thinking if I bought under an interest only loan that wouldn’t suck up all of my savings and my payments would be significantly less. I need to stay as agile as possible, I’m not sure when this transition will take effect, but I do know it will be shortly. (2-3 months)
1.) When buying under interest only loan, does it matter if I buy a Town Home, Condo, or single family home?
2.) In your experience, which would be the best for a single female, with no “baggage”. Town home, Condo, or Single family home?
Thanks a bunch Ofgift!
Tiff.
tiffany,
i've been following these posts, so i thought i'd throw in my 2 cents. all the articles i seem to find about the housing market seem to indicate that prices in florida have over-appreciated. that's a pretty broad statement, but you need to look into how that might affect prices in your area. it would suck to buy a house, and have it depreciate considerably soon after.
are you just planning on living in it, renting, or rehabbing to sell? either way, i would never pay full price, even if it requires you to do some work to it. as far as being better off with a real estate license, i don't think the license will make much difference -it's the experience you'll get as an agent that will really make the difference. but even then, i've met a handful of agents that had been in business for awhile, and didn't seem to know anything besides how to fill out the trec contract... if i were you, i would get a good re agent that specializes in investments (or is an investor), and tell him what you're trying to accomplish. if you're eager to start, but lacking skills and experience, you can make up for it with a good agent (but you're paying for it).
why do you want to buy with an interest only loan? your investment plans really do make a difference. interest only can be a good way to keep your expenses down if you're doing a quick rehab, and then selling or refinancing a hard money loan with a conventional. also, i hear people talking about buying real estate with negative cashflow, paying interest only, and waiting for heavy appreciation to take place. then selling, paying the balloon note, and walking away with a piece of change. sucks if it starts depreciating. buying re, and basing all your profit (and success) on the possibility of it appreciating sounds more like gambling then investing. then again, i'm sure large fortunes have been made on this type of investing, but the day i try it is the day the market tanks.
remember, "luck is what happens when preparation meets opportunity." the preparation is education and experience, the opportunity will present itself. there's a bunch of posts on here from people that actually know what they're doing. start reading everything on here to get started. then start looking for local re clubs. and get a few books that can help you become more informed about the sector that you wish to specialize in. good luck.
-dean
oh, and as far as condos, townhomes, or single family, that goes back to researching your market. there's parts of downtown dallas where condos are huge, others where you'd want to invest in sfh's. you probably need to pick a small area to "farm," and become super familiar with the market in that area. remember, with condos/townhouses you have maintenance fees which add to your costs, and that might discourage some people buying at lower prices. plus, you have a board of directors that are telling you how to live, or they aren't doing anything, and your neighbor becomes a huge slob... anyway, i've been rambling on for awhile now...
-good luck
Tiffany - Just as far as being a single woman, unless you're handy and have some extra time on your hands or have cash to pay out, I would stick to a condo or wherever someone takes care of maintenance. Not to be sexist or anything, but I was also a single 25 yr old female when I bought my first, and it was a condo. I only had to deal with the inside. It was easy. Now I live in a bigger house on a couple acres, and I do love it, but it's a lot of work. Lots of upkeep. I'm glad I started with a condo. Plus likely it'll be cheaper, if you're trying to keep the payments lower.
First, I would be VERY sure to not buy a condo, townhouse, or a house in an HOA or POA. The prices may be quite a bit lower, so ask yourself why--one reason is that the dues, fees, fines, and assessments can/will be increased/added sometimes for reasons with which you totally disaagree, that might be harmful to your unit, and that you have no choice but to comply with.
Boards of directors can be very inflexible, YOUR unit may be good, and you may have good tenants, if they allow rentals, but the guys next door may not have good tenants, and that can cause a much more severe problem in a condo or townhouse, but of course it happens even in sfd's.
I would, and did, though not at 22, buy a new house and had it rented before it was completed. Because it was new, I didn't worry about repairs and maintenance for a few years, and my management co. took care of what was needed. (they still do, even for the "new" rental.) I have a home warranty, which covers much, but not all, that homeowners ins doesnt cover, and beyond that, tenants pay for damages.
Also in an HOA or POA, you HAVE to maintain a standard level of yard and exterior maintenance, or you will be fined. You have numerous RULES to live by, that your tenants may refuse to live by, (so write in the contract that they have to or can be immediately evicted)
You have to keep all dues paid up, or you will be fined, and quickly could lose the place to liens and foreclosure.
Minna's right, s SFD is a lot of work, but if the place is in good condition, and you have the insurances, it's not a big deal, probably. My tenents are required by contract to also keep the yard neat and weed free, trees trimmed to 8' above sidewalk, etc, (that's in the contract) or they can be evicted.
My MC does complete background checks and all tenants have left on their own. The recent tenants have been there three-four years. I hope they stay at least 4 more, as long as they continue to be good tenants.
My Home Warranty costs about $350 a year, which is a lot, but I CAN'T do the repair work. so if something happens, the tenant calls the MC who calls the HWCo, who calls a repair person. I pay about $50.00 per covered problem. I think there have been 2 calls to it in the 6 years I've owned it and furnace repair. For me, it's money well spent.
(and you would have had the same problem in a condo--those would be homeowner repairs, not condo problems.
ofgift -
I am just starting to look at rental investment property and was not aware of Home Warranty. I have been looking in Washington, but I'm not sure if I will still be in the state 5 years from now. One of the things keeping me from making a purchase is that I won't be here to fix problems (I am quite handy). What is the extent of the coverage? E.G. is it just for appliances?
Tiffany-
In my search, I just ran across an article that makes some great points for single women buying their first home. Maybe this will help your search.
http://www.divinecaroline.com/article/22295/26713?CMP=KNC-DC_YSM_6
Sophie
ofgift -
I'm not sure condos deserve that much of a bad rap. Yes there's advantages and disadvantages of both condos and sfh's, but condos can be perfectly reasonable, you have to research the community. And I didnt get the impression Tiffany was looking for an investment property - just a home for herself. I don't personally know the cocoa beach area, but I can tell you I lived in a town for 3 yrs that I would have otherwise been priced out of because I lived in a condo, and my fees were always low. Still lower than the cost of a mortgage living in an sfh there.
But I will second that I wouldn't keep a condo for an investment piece. I did after I moved up to my house, and I'm now evicting and selling which I should have in the first place. But as a first home - I'd recommend it.
google home warranty insurance.
What I have now is Fidelity National. I followed a few of the links on their site, but they didn't show their policy. If you input your zip, it might. otherwise, call them--I think there's an 800 number, and ask them to send you a coverage brochure.
I didn't follow links to any of the others. I didn't see American Home Shield listed, but it's a big one here.
There's several others, so call different ones and see what they offer. Some differences I've seen are related to water heaters: some cover for "sediment" damage, others don't. Another difference is what they cover re garage doors.
Watch the heating and cooling systems, too, for your area, of course. I'm sure there are diffeerences in many other areas, too--I just don't knowwhat they are.
The prices are pretty similar from what I've seen, and I spend the money for sediment coveraage cuz we have hard water.
Some co's charge less per visit--Mine ie $50.00 now, some co's are $40.
I also have the "upgraded" policy, becasue it's what I feel I need.
Your management co may have a deal with one or another HWCo for a lower price if you use their coverage. Mine does, but I may change next (august) anyway, because they often offer a "coupon" for the first repair either free or a percentage off. NF gives only one, so by transferring, I get another free visit--I think :mrgreen:
I did not have to have any evaluation of either rental before buying the HW coveraage, but the first was brand new, the other 6 years old.
Your experience may be different. (I've had more calls to my residence than to my rental... :roll: )
I hope this helps.
ofgift
ofgift,
Yes, this does help. Thank you!
Originally posted by "Minna":
I agree, like anything else, there are good and bad points about them. Researching the community means more than looking at the exterior, or even interior of the unit. Get the articles of incorporation, the CCR's and _all_ amendments, and the by-laws to find out the rules you WILL be living under, whether it be condo, townhouse, HOA or POA, or any kind of planned community. Talk to several homeowners and find out about the place, how the rules are enforced, how the assessments are raised, how much and how often, if the board is a good one or not, etc. drive around and see how many for sale signs there are. Most HOA's etc will not/are not required to give info of any kind, particularly financial, to "outsiders" so she would not be able to get ALL necessary info, unlsee she happens to meet a homeowner who not only has the info, but is also willing to share it.
Part of the research should also be reading some of the homeowner fora on the web. Here's URL's for two:
http://www.hoatalk.com/Home/tabid/36/Default.aspx
and
http://www.ahrc.com/new/index.php/src/news
In fact, on the first, there is now a subject called:
Sage advice on HOA and Condos
this is a quote from it: "...I recently received a note from our manager, in response to a request for some condo business forms and procedure. He made a stab at giving me what I wanted and included what amounts to a vailed threat, that he, and the board, I assume, want to caution me that I should have a legitimate reason for asking for this information and that I had better assure myself I have the support and interests of all the council members..."
Oh, there is also one called "Boaard of Dictators."
That would make me think thrice, then run fast the other way!
Originally posted by "Minna":
Still-I don't want to live under rules such as planned unit developments have, and the chance of even one rogue board member.
Originally posted by "Minna":
You were one on the lucky ones, lol.
May your good luck follow you to the end of your days!
ofgift
Hey I hope so...it does seem that's been on my side..
And yes you must check out the rules (they'll have a whole book) to see if they're acceptable. I had like a week to read and decide whether they were ok by me, and if I wanted to still pursue the sale.
And one more thing when researching condominiums should anyone go that route- you have to know what they have in reserves. I remember my lawyer at the time telling me don't buy unless they have (and he checked) at least a million in reserves, and that's CT in 2003. What that magical number is elsewhere today, I don't know, but the reserves are what keep your fees in check. Especially when they do assessments. Probably best left to an RE lawyer to check on.
Man - and I just became a fanatical poster - how's that? maybe I need to spend just a little more time thinking about RE eh? Not enough yet?
Originally posted by "Minna":
you have to know what they have in reserves. Probably best left to an RE lawyer to check on.
They are usually not (PERMITTED to be) given until just before closing. Again, you were lucky.
Reserves? Financial information? They aren't going to tell you that willingly, for sure.
Yes--spend big bucks on an attorney to find this out. :crying:
condos can be a real pain. there's a lot of people dumber than you, and most of them get elected to the board of directors. then, half those idiots seem to make it into a full time job. it really can be a pain. that being said, the right community can be a great investment. my mother is about to buy her 5th condo. she lives in one, and rents the others out. they've had solid price appreciation, and historically low fees. and the atmosphere is so investor friendly that probably 20% are NOO. in fact, they are trying to amend the bylaws to prevent anymore NOO. i can't blame them. you only want so many renters in your little community. my mom, and all her tenants love it there, because it has a strong community feel to it. benefit for her, is that she lives there, and is actively involved with the directors. if you have condo rentals, and are not able to be actively involved with the board, then it's probably a bad idea.
-dean
People get elected because no one else wants the job. The positions are unpaid, it's all volunteer, and it can be a lot of work. I would guess that Deans mother's condos are in the same association. She's on the board, so she not only has a landlord contract with the tenants, she also has board knowledge and power over them. That's the ONLY position to have if you have rentals in a condo. As he said, "...if you have condo rentals, and are not able to be actively involved with the board, then it's probably a bad idea." I'd like to underline "active."
As far as limiting the numbers of rentals, the mortgage companies have a guideline as to the numbers of rentals permitted beyond which they will not give loans, or better loans, to new buyers. Or it could be the "I got mine, so..." mindset.
Hi,
I bought a condo two years ago and i financed it through wells fargo with an interest only variable mortage. 6 months later.....i realized i made a huge mistake and refinanced my loan to a fixed rate. Though i do recognize that in some instances an interest only mortage may make sense, i would discrouage these type of loans. The main reason why i financed with an interest only mortgage is because i was 23 years old and i couldnt afford high monthly payments. Then i started to see and hear about people having major problems with these types of loans and foreclosure growth rates started skyrocketing. Not only that....but you dont pay anything towards principal. You are banking on price appreciation and in a market like the current one.....it is a lot more risky than 2-3 years ago when home values were out of control. Just my thoughts. Hope it helps.
Dave
oftgift,
brother, i swear i almost heard a little bittnerness about condos in your post. you wouldn't be the first one. a lot of people that live in condos with bad management feel that way. my mom has lived in that condo for about 30 years now, so she kind of has a special place there when she's nagging the board. i think the only people that have lived there longer are about to die (sorry guys). anyway, the limitation on rentals they're trying to put in has nothing to do with mortgage companies. in the last few years, the number of rentals has skyrocketed there, and the OO's realized that a lot of people with no vested interest in the property don't take care of the neighborhood, and don't participate in the community.
davebt,
i know a lot of people made a lot of money on interest only loans and price speculation. well, a lot also made a bundle on the dot com stocks - and a lot went bankrupt because of it! probably the only good time to take an interest only loan is for a quick rehab/flip. if you're doing it to live there, you would be better off finding a place you could actually afford... i'm pretty sure i already know what all cash would say.
My husband and I bought our first home (condo) 7 yrs ago. It has gone up 70K since then however the board is a pain in our rear. One of the board members is retired and has nothing better to do than to walk up and down several times a day with his clip board, making notations about every little thing, then calling the Management Comp to fine the owner for such things as : too many flower pots on the patio/balconey, anyone who has decorated their front entrance with holiday decorations such as hearts on valentines day, bunny rabbits on easter, Christmas lights are out of the question. Any cars parked in the visitor parking overnight have to have board approval and must be reported. No oil changes on the property, in fact we got a letter because my husband is the first to get up in the morning and places everyones newspaper at their front door. WE received a letter from the board telling him not to do this. We know everyone in our building (there are 4 units) and the only one who would complain is a neighbor who hasn't subscribed to a daily paper and is used to stealing someone else's. The list goes on!
Hi Tiffany,
In regards to your "I should exemplify a little deeper in regards to my state of employment. I currently work for United Space Allies as an IT manager. I’m quite fed up with my position and would like to start my own company. "
I'd like to make a suggestion that you do not change any type of employment status while you are buying a home. If you do, it could cause some problems when trying to find the proper financing. I understand it will be in the same field, but lenders do look at employment history quite close.
Just my 2 cents...
Best Regards,
Invstor01
Sophiew- thanks for the "Making Money on Real Estate" article. It has changed my search. I'm now looking at homes that can also be rentals.
Tiffany - I do not have the expertise on the condo market as the others on this site, but I do have something for you to consider. I live in a city where you can't turn the corner without seeing a new condo going up. My co-worker bought a great condo two years ago with the intension of staying there for at least 5 years. After a year, he was offered a job in another city. When he put his condo up for sale, he realized there were brand new, nicer condo's in his neighborhood selling for less than he paid. His condo just sold and he took quite a hit. Hopefully this isn't the case in your city.
This website is an amazing resource for the first time home buyer. I'll be watching for new posts. -Thanks everyone!
The divinecaroline link is a real hoot! You should all definitely take five minutes to check it out!
