This would be the condo-like co-ops that missbunny was describing? Can you not get similar regulations with houses? I know there have been any numbewr of people here complaining about homeowners’ associations dictating how short the grass must be cut, and what colour your garage door can be…
That breeze you just felt was my joke going over your head… 
Just do bear in mind that while as a general rule real estate appreciates in value, this is not a guarantee.
Eons ago we bought a condo as an investment. The premise was that we would use the proceeds from the rent to pay the mortgage and other expenses, and that in ten years the value would have increased enough that we could sell it and use the equity to pay for our kids’ education. Unfortunately, for some reason the price of condos absolutely TANKED starting at approximately the instant we finished signing the contract. And while we did use the rental income to pay the mortgage, in 10 years the dam thing just barely exceeded its original purchase price. Plus we had the aggravation of being landlords, which is a far cry from sitting back and banking the rent checks. But that’s another story.
Anecdotal evidence, YMMV.
booklover, I am so close to where you are now. Wednesday I applied for “pre-approval” for a loan for the first time ever, and I was approved yesterday – or possibly pre-approved, as I’m still not entirely up on the lingo. I started by taking a free course at a local adult ed center given by a realtor. So far I have followed the bulk of advice from this course, as it has made sense.
If you like your local bank, that’s where to start. They’ll ask you a bunch of income and debt questions and do a credit check. I called my credit union to make an appointment with a loan officer, and the receptionist instead steered me to their website, where I filled out a form. I had to estimate a loan amount to fill it out, and I did. Yesterday I got a personally written email response approving me pending the resolution of one item on my credit report – I believe this is a medical bill that my insurance should have already paid, but hasn’t.
I also had a personal meeting with a finance guy that the realtor pointed me to. I used a slightly different approach with him. He also wanted to know how much house I wanted to buy. I wouldn’t name a number, I wold him I wanted to know how much a “reasonable banker” would loan to someone in my financial situation, which is not particularly good. FYI, I learned am unable to afford the theoretical “median single family home” in my area. Single guy, single income, no kids, no significant debts or assets except a fairly large chunk of cash to put into a downpayment. That’s okay actually, as I want a condo, and they are signicantly cheaper by and large in this area.
It turned out that he would loan me 50% more than I had asked for in the credit union’s online request form. He also found me a Wisconsin state program for 1st time home buyers that was nearly more than a point lower than the rate offered by the credit union. The rate is under 6%, the paperwork is out in my car or I would tell you exact.
He also told me there’s a catch to this state program, in that buildings have to be “approved” by this state agency to qualify. I asked if I could call somebody and have a building inspected to be “qualified” if it wasn’t already. The answer was yes, but most likely by the time the inspection came around the condo would already be sold to someone whi didn’t need to worry about its qualified status. What this ends of meaning is that the newest construction and renovated spaces are not approved. The older a building is and the more units have turned over, the more likely it is to have been inspected and qualified by the state agency. I’m somewhat worried that under that program I might miss out on a very nice place, and the finance suy suggested that was possible. So he also approved be for a different loan, the same principal amount, but with higher points – 6.25% for 30 years, I think. The credit union number was 6.37.
To be fair to the credit union, I still haven’t gone in and met someone personally to refine what their offer might become. For instance, the state program had a particular small benefit to emergency services and health care workers, an extra 1/4 point off the rate. The online form had no way to capture subtleties like that, so I imagine the credit union might approve me for something more competitive to this other guy.
Yesterday I also went on my first ever visits to properties with a realtor, with a genuine eye to buying.
Yes you can. Lots of new planned developments are springing up; the houses in which are all under the control of an HOA.
Ok, I am going to try and put all this in layman’s terms and keep it nice and simple.
A condominium is a type of dwelling. You own your walls and in (and possibly a yard). You are not responsible for lawn cutting, snow removal, paving, garbage removal, etc. That is all covered by your association fees (usually between $100 and $300).
A townhouse is a condominium (remember, a condominium is only a type of dwelling - think of it this way - if you live in a ranch house, you live in a ranch style single family house. If you live in a colonial house, you live in a colonial style single family house.) A townhouse is nothing more than a style. It means there are 2 or more floors, but it is still a condominium. The same rules apply as above.
A co-operative is similar to a condominium but you own shares in the company that owns the building. They are much, much cheaper than condos but they do not appreciate in value as quickly. They are much tougher to get into and much tougher to sell. Also, the fees for living there are much higher ($400 - $1,000 average). Basically, your monthly payments will be the same as a condo (mortgage & association fees) but they are not easy to sell.
Call a Realtor or a mortgage lender to see what you can afford. If you can afford a house, I would suggest buying one over a condo/townhouse/co-op. The reason for this is that houses, in general, do appreciate much quicker than condos. Condo markets fluctuate more than housing markets - condo markets have been known to crash pretty quickly.
Also, ask the lender about 103% financing (100% of the house and 3% of the homes value towards closing costs). My husband and I did this when we bought our first home and we needed all of $500 to close. That’s it - nothing more.
I hope all this helps!
I had the same thought that booklover had. (Except the number I was coming up with was $50,000-$70,000 for 20%. I can’t even picture a $75,000 home. Does it have plumbing?). Then I finished the thread, and started breathing again. ((I make a decent salary and am not entirely wasteful, but it could take quite a while before I was able to save up that much.))
How long, generally, do people save up before buying a house? What questions did you (or should you, or do you wish you had) ask before starting on the house buying process.
Another minus side to a co-op is that everything you do has to be approved by the Board, including your choice of tenants if you want to rent it out. We won’t deal with renting co-ops for that reason.
I have to disagree with portions of this post. A house can be a great investment but isn’t always, for everyone. Homes DO NOT always appreciate in value, certainly not over the short term, and it is possible to lose money over longer time frames as well. Just because large parts of the US have been experiencing rising real estate values for the last decade or so does not guarantee that they will continue to go up forever.
The biggest danger IMHO is not being educated, either about buying a house in general, or about the specific geographic area where you are thinking of buying. Asking questions in a forum like this is an excellent place to start. I would also recommend reading the real estate ads in your area, and maybe going to some open houses. Going to an open house in no way obligates you to continue working with the realtor running the open house (unless you intend to bid on that specific piece of property). They are a great way to see what people are asking for various houses in your area.
amarinth my wife and I saved for our house in the overheated Boston market by moving from our gorgeous $650/month apartment to a tiny crappy $300 a month deal. We had no kids at the time, one car and we were both working full time so we saved money hand over fist. We intended to stay there two years but my wife couldn’t take the crappy apartment after about 18 months. Luckily we found a house we liked about then, made an offer and it was accepted.
This is a statement I see all the time and I must correct it. Not all condo associations cover lawn cutting, snow removal, etc., from the condo fees. It all depends on what is written in the condo trust document. Some condo fees cover only master insurance. Some cover all the things listed above plus new windows, new roof, landscaping, and more. Don’t ever assume that just because it’s a condo that you’re going to be free of maintenance forever. Some condos don’t have any fees at all: whatever is necessary to be paid gets paid out of the individual owners’ pockets.
I saved up for about a decade before buying a house. 20% down, even.