I bought a 2 room condo for those reasons too, but it was still the most cost-effective 2 room
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I'm buying a condo!
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I bought a 2 room condo for those reasons too, but it was still the most cost-effective 2 room
I just want to clarify, since it probably doesn't go without saying, that there are different kinds of points and not all are for PMI. There are origination points (pure profit for the lender) and buydown points that you can pay up front to lower your interest rate. Avoid origination points if possible and buydown points aren't a good idea for homes you don't plan to keep and aren't even always a good idea for homes you do.
You guys have been great with your replies. *Please* keep it up. Another question, is it typical to have to sign an agreement to work with a buyers agent exclusively? One of my friends had to work with her agent for a six month period. Is that typical?
It is typical.. but it is not required. If that makes you uncomfortable, then don't do it. If there's one thing that's true, there's plenty more realtors to choose from. And it's important that you like/trust your realtor, after all, they are representing your interests (for a fee, of course). You can also try and negotiate for a lower time-frame if you want. Don't forget.. ask for anything you want. The worst you will hear is "no".
I don't like the idea of "playing the field" and working with multiple buyer's agents at once but I firmly believe that if an agent is not meeting your expectations then you should have complete freedom to switch agents. Thus, don't sign an exclusivity agreement unless you absolutely have to and if you do, make sure the period is not a long period. Six months is too long. 60 days would be more reasonable.
By the way, when you are choosing an agent you don't want to use someone who isn't busy but you also don't want to choose an agent who is too busy. An agent's lack of business can mean previous clients weren't happy and left and/or didn't recommend the agent to other people. It could also mean the agent is simply a new agent and has not had enough clients to generate good referral business so ask how long they've been an agent. Good agents have a lot of referrals from previous clients so they'll stay busy but if an agent is too busy then he/she won't be able to dedicate the time to you that you deserve. The most common reason I hear from people who switch agents is the agent was never available.
Back to the subject of new agents, I don't recommend new agents to first time buyers. As a first time buyer, the whole process of buying a home is completely new to you (unless perhaps you work in the industry) so you want an agent representing you who has a lot of experience where you don't. Once you have some experience of your own, there's nothing wrong with new agents; everyone has to start somewhere and they'll have more time to devote solely to you.
By the way, when you are choosing an agent you don't want to use someone who isn't busy but you also don't want to choose an agent who is too busy. An agent's lack of business can mean previous clients weren't happy and left and/or didn't recommend the agent to other people. It could also mean the agent is simply a new agent and has not had enough clients to generate good referral business so ask how long they've been an agent. Good agents have a lot of referrals from previous clients so they'll stay busy but if an agent is too busy then he/she won't be able to dedicate the time to you that you deserve. The most common reason I hear from people who switch agents is the agent was never available.
Back to the subject of new agents, I don't recommend new agents to first time buyers. As a first time buyer, the whole process of buying a home is completely new to you (unless perhaps you work in the industry) so you want an agent representing you who has a lot of experience where you don't. Once you have some experience of your own, there's nothing wrong with new agents; everyone has to start somewhere and they'll have more time to devote solely to you.
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Opps. I meant to say Do not over finance your purchase.
To the OP, there has been some great advice already provided in this thread. Hopefully, here is a little more...
It is better to purchase a smaller property that you can afford than to over extend yourself.
Property prices, can and do go down at times. There is nothing like being upside down in your home mortgage loan. I've seen it happen a few times. Definitely not a good situation to be in.
Learn the condo real estate market in St. Louis. Then learn to take advantage of it.
My questions were to get you started on thinking about the various aspects of your purchase.
One thing that I didn't ask, is will this be an investment property (one that you purchase for appreciation or to rent out someday)? Or will it be a place that you want to life in for a long time?
If it is an investment property, be sure you get a good property for that purpose and that you can sell. If you purchase as a future rental, makes sure that you get the right type for your area. Good rentals are easy to get rented and tend to stay rented over time. Bad rentals will stay vacant or be hard to get rented.
Which brings me to your loan.
Generally, if you are going to live in the property and keep it for a long time, it is best to pay off the loan early to save on interest costs. The amount that you pay for interest is much more than you will save on your taxes via the home mortgage deduction. Consult your accountant/tax attorney for specifics in your case.
Let's talk about the loan. You indicated that you are looking for a 30 year loan with a fixed rate. You also indicated that you are looking at something up to $120,000.
So for discussion sake, let's say that you finance $100,000.
I don't know what rate you are going to get, so I will arbitrarily choose 6% for discussion purposes.
A $100,000 loan for 30 years at 6% will give you payments (Principle and Interest) of $599.55 per month. Total payments over the life of the loan will be about $215,838. This means that you will end up paying a little over twice the loan amount during the life of the loan.
As for paying off the loan early. Let's say that you pay an extra $100.00 principle on the loan every month. That means you would be making payments of $699.55 each month. If you did this, you would pay off your loan in 21 years instead of 30 years. This would save you about $64,751 over the life of the loan.
In this case you would invest an extra $100 per month for 21 years, or $25,200, to save $64,751 which is a nice return on your money. Plus you would own the place sooner and be free of monthly mortgage payments which is a nice feeling let me tell you!
For fun, let's say that you pay a extra $200 principle on the loan every month. You would pay off the loan in 16 years 5 months. This would save you about $97,727 on the life of the loan. In this case you would have invested an extra $200 per month for 16 years and 5 months, or $39,400, to save $97,727 on the life of the loan. Not too shabby!
You asked about how much you should finance. Just remember loan officers look at it differently than what may be good for you. Many times a person can finance more than they should. Also, consider all of the costs for condo ownership. You will have taxes, membership dues, maintenance fees, pest control, etc., plus your normal electric, gas, water and sewer bill.
Condo association rules can be tricky and very limiting in some cases. Be sure you understand them before purchasing.
Which leads me to the amenities. Just remember, nothing is for free. Amenities sound great but can end up costing a lot to maintain -- especially in the long run. Also, how will amenity issues, and there will be some, be settled and how much will you have to pay for your part of the total cost?
Well, I hope that you find this information helpful.
I have been to see two places so far (life has been really busy)...and both places I've been to have been new developments, complete with their own sales centers. It made it feel more like a leasing office at a rental place than looking for a place to buy.
How does this impact, if any, my need for an agent? Also, it feels like the prices for these places are more firm than they would be for an individual unit selling in an existing building. Is there still room to negotiate? Is there anything else that I would need to know about places like these where I can customize as they build it?
How does this impact, if any, my need for an agent? Also, it feels like the prices for these places are more firm than they would be for an individual unit selling in an existing building. Is there still room to negotiate? Is there anything else that I would need to know about places like these where I can customize as they build it?
I'm not sure if someone mentioned this. If you are looking into buying a condo/townhome be sure that the association fees are not high. Ours is outrageous and you could pretty much afford a house once you factor in what your paying for the fees...
Nuc
Edit: I guess a couple of people may have mentioned this. Also ask if the fee goes up yearly. Ours keeps going up by almost 7% each year! As you can tell I'm not to happy about it! Pisses me off!
Nuc
Edit: I guess a couple of people may have mentioned this. Also ask if the fee goes up yearly. Ours keeps going up by almost 7% each year! As you can tell I'm not to happy about it! Pisses me off!
Well, there are pluses and minuses to buying in that sort of place.
On the minus side, they're not likely to negotiate. If they don't sell to you, it's likely they'll sell to someone else. I'd still suggest a realtor, since if you don't get one, they'll have one act for you, typically from their own sales office, and there's not much incentive for them to work FOR you, when they are in cahoots with the seller.
On the plus side, if this is a place that you think is likely to grow in size and popularity, you'll be getting in on the ground floor, and hopefully making a killing when you sell.