Buying Your First Condo

So, you’re considering making your first home a condo! You’re likely considering it because the price was right, less than a detached home, not a lot to look after, and you were attracted to the various amenities: the swimming pool, party room, even the exercise room. And the maintenance fee — the condo fee — was more than reasonable. So the next question is this: how do you live in it?
When you’re considering condo living as a lifestyle, it’s good to remember how density affects you.

A townhouse condo could be two or three family units in the same space that a family in a single detached unit might occupy. They could be side by side or one above the other. In a high-rise apartment-style condo, the ratio can be considerably higher.

Now, back to the mindset and trade-off. Do you need absolute say over how much noise is made, exterior colors, flower garden preferences, when you can wash your car, and how loud and how long you can party or argue? If these things matter a great deal to your lifestyle and happiness, and your capacity to compromise on them is extremely limited, then the trade-off for condo living may not work for you.

And just what are those trade-offs? The most obvious one is your lack of involvement in exterior maintenance in the case of a townhouse — cleaning the fall leaves from eavestroughs, downspouts, and the yard, shoveling snow, cutting grass, planting gardens and looking after them, the worry and work about looking after major maintenance items like the condition of your shingles, your asphalt driveway, window cleaning, and the condition of your siding. In the case of a high-rise suite, there’s absolutely nothing to do maintenance-wise… everything is taken care of by the building’s maintenance department.

While these work-related items may be the most obvious practical trade-off, the list doesn’t end there. Include the growing attention in new condo developments to amenities: swimming pools, games rooms, party rooms, library-media rooms, exercise facilities, concierge service, and secured underground parking.

What mediates between the mindset and the trade-offs? The provincial Condominium Property Act dictates how boards of directors of condominiums must act in administering condo rules, how money is spent and accounted for, how the corporation must save for the big items — the new roof, the leak from the unit above you, the sinking concrete parking floor — and how the unit owner may seek redress for poor or inequitable treatment.

The Status Certificate: This is provided to you to review when you purchase a condominium. It sets out how your condo fee is assessed, what parking spaces and storage come with your unit, and how successfully the condo project is saving money for long-term maintenance and repairs (the reserve fund study).

The By-Laws… Rules and Regulations: These are rules that govern how your condo complex works. They are approved by the owners and are defined to a degree by the Condominium Act. They will outline what restrictions there are regarding what you can and cannot do with your unit and shared (common) space, outline how the board works, detail any pet restrictions, how the complex will be insured, and so on.

The Board and the Property Manager: How do these folks go about their business? Does the board meet regularly? What is their style? Is it budget development and due diligence on the future of the complex or is it running and ruling the place? Are other owners satisfied with the performance of the property manager? Or perhaps the condo corporation manages itself, in which case is it doing a good job or is it just cutting corners?

Your mindset or peace of mind and the value of the trade-off depend on your due diligence when you buy. Looking at how well-maintained the lobby, the swimming pool, and other common areas are is one thing.

When Lenders Make Bad Choices You Pay

Shake-ups in the sub-prime lending market in the US and soon the UK bring to light the problems of consumers having faith in lenders. Many assume that if they are approved for a loan or mortgage that it means that someone responsible felt they could afford it. Nothing could be further from the truth.

Consumers are mistaken about the motives of many lenders, especially the sub-prime lenders that extend credit to people with less than perfect credit. Lenders are businesses that make money by originating loans on behalf of others. An average loan broker is not a financial planner nor providing you with financial advice. They are trying to get your application to tick all the boxes to be approved by the lender so the mortgage broker can get paid a commission for finding you and generating the loan.

The issue of affordability hardly even comes into the equation when approving a loan application. With lenders offering no documentation or self-certifying loans can we be surprised when a consumer might bend the truth a bit to get the money they think will save them from a difficult financial situation or the house they want.

The loan originators sell their loans to a loan company that will often bundle a bunch of loans together and sells them up the food chain. It is not unusual for a new loan to pass through two or three hands until it lands in some bigger fish loan warehouse.

During the stage when you would hope that a sub-prime loan is screened for appropriateness what is happening in many cases is that everyone is looking the other way. The borrower is fudging the numbers a bit, the lender is pushing the envelope a bit and everything is getting pushed upstream.

Currently, in the United States, a crisis of sorts is brewing in the mortgage market with sub-prime loans going bad faster than milk in the sun. In 2000 approximately 3% of the loans originated in the United States were sub-prime mortgages. In 2006 that number was only around 13%.

Over the past six years, lenders have smelled blood in the water and sought to exploit an area of the lending market that they felt would make them a lot of money. And I guess they were right as long as the US economy remained strong and growing.

But with the housing market cooling and loans originated in the past year or so going bad as fast as they are written, some lenders that have enjoyed strong growth in the sub-prime market are now finding that as many as 19% of those loans are delinquent and in default.

And now, some of the lenders behind the sub-prime market have found themselves insolvent. Waves of these smaller companies have been going bankrupt, with as many as 22 just last week seeking protection through bankruptcy.

What makes this situation particularly scary is that many of these newly originated loans are interest-only or adjustable interest rate loans and if interest rates creep up even just a bit, many will find themselves in a situation where they are losing their homes.

The lesson to be learned from this story is that the consumer should not rely solely on the approval by a lender. They should make certain that the proposed monthly loan payment will fit within the budget with room to spare.

Mortgages – Some Important Points You Need To Consider

There are many potential perils and pitfalls that a borrower can face when buying a home and taking out a mortgage. Many borrowers can fall foul of these perils due to misinformation or a misunderstanding.

Read on as we try to discover some common pitfalls facing the potential mortgage borrower.

Interest Only Mortgages

Interest-only mortgages are becoming increasingly popular, especially with first-time buyers looking to take that first step onto the property ladder. Although having an interest-only mortgage will result in lower monthly repayments, it will not however pay off any capital owed on the mortgage.

Interest-only mortgages do have their place in the market and can be extremely useful in times where money is very tight or when there is an investment vehicle in place to repay the outstanding mortgage balance at the end of the term. For most borrowers, however, interest-only mortgages do seem to be a false economy – no headway will ever be made into reducing the balance owed.

On the whole, an interest-only mortgage should only usually be adopted on a short-term basis before reverting to a Capital repayment type mortgage.

New Build Enticements

The land is a precious commodity in the UK, especially in our densely populated towns and cities. In recent times, property developers have looked to seize upon every available scrap of land to service the need for new homes – and of course, to make a quick buck.

The need to fill these new developments as soon as they are constructed is big one – building contractors will commonly offer special deals to entice prospective buyers. Such methods to entice customers will include paid-up stamp duty and full or partial deposit payment.

It is important to remember in many walks of life that if a deal looks too good to be true, then it usually is – builders and developers will often factor these costs into the actual price of the house or flat.

Don’t Move Home On The Weekend

This is one tip that you may have heard before however, it is often overlooked – Don’t move home on the weekend! Moving home on a Saturday remains the most popular time with people generally reluctant to take time off work. It is the busiest time to move and also the most expensive with many removal firms and van hire companies increasing their prices accordingly.

Attempting to move house on your own can mean the stress and hassle increases tenfold – although removal firms may seem to charge very high fees, moving without their help can often mean repeated trips and lots of strained muscles.

Trust Your Judgement

The house buying process and securing a mortgage, too many is a very daunting prospect. It is very important to stand your ground when it comes to sticking to a budget – it is typical to put in an offer below the asking price to negotiating the best price, with most sellers expecting you to do so.

By the same token, if you are selling a property, it is not common for the seller to accept the first offer they receive in pursuit of the best price. Holding out for your favored price can often pay dividends – it is often worth trusting your judgments.

Shop Around For Insurance

More often than not it pays to shop around for insurance policies. When taking out a mortgage, it is common for the lender or mortgage broker to peddle insurance policies that they will arrange on your behalf.

For them, this means extra commission! Insurance policies such as buildings and contents insurance, life assurance, and mortgage payment protection insurance to name just a few. These policies can often be arranged at a cheaper premium if you are prepared to shop around for yourself!

Look Before You Leap

Taking out a mortgage with friends or a partner is becoming an increasingly popular way of buying a home. It becomes important therefore that if you do decide to take this big step, you must be confident that you are going into it with someone you know and trust.

Relationships do however turn sour at times and if this becomes the case, then sorting out your financial predicament will be an unwanted hassle – It is important to establish at the very start exactly what should happen if things go wrong and keep a record of who has contributed what. A consultation with a solicitor could prove to be worthwhile also.

Honesty Is The Best Policy

It always pays to be honest – this becomes particularly relevant in the case of arranging a mortgage or insurance policy. Dishonest or inaccurate information could leave an insurance policy worthless and dishonestly could be seen as a fraudulent offense on a mortgage application form.