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  • Flashback Friday: Tips for Buying a Condo

    Originally published in 2007, but still good advice … We’ve been living in our condo for over ten years now, and are still happy with our choice!

    Tips for Buying a Condo
    Here are my first-hand experience tips on buying a condo (keeping in mind that I’m no real estate expert):

    1. Take a good look at the outer property. Are the building and grounds well-maintained? When we went to check out our townhouse, we saw gardeners cleaning up the grounds and caring for the trees and plants. The pool looked clean. And the neighbors’ front doors looked neat as well. Contrast that to a friend’s condo, where getting repairs done was like pulling teeth and the pool was practically unusable.

    2. Ask for all of the homeowner’s association (HOA) documents available. Are the fees accounted for? Is there a budget? Are the minutes detailed or sketchy, and do they involve legitimate issues or the meowing of a neighbor’s cat at noon? It was reassuring to us to see that there were projected and actual budgets for the current and previous years. The amounts seemed reasonable, and there were funds set aside for future maintenance and repairs. Everything about the minutes indicated that the HOA was run by competent people who weren’t wasting everyone’s time and money.

    3. Have a competent real estate agent and/or mortgage broker. I loved our real estate agent and have recommended him without reservation to friends. He knew the business well, was straightforward with us, and never once got pushy. When he told us the list price of a condo, he also always told us the HOA fee. If there had been anything fishy going on, I’m confident he would have caught on and alerted us to it.

    4. Ask lots of questions. Our real estate agent and mortgage broker got used to hearing my voice a lot during the 30-day escrow period. I was always nice, of course, but I was persistent. I insisted on all of the HOA documents, and I remember there was some trouble getting all of them. Ask anything you can think of: what your exact monthly payment will be, the amount of the HOA fee, whether there will be a prepayment penalty, etc.

    5. Read everything you sign. It’s tempting to skip over all those paragraphs pages of boilerplate, but it’s important to read all of it. At least skim it for something out of the ordinary. And you should scrutinize anything that’s not boilerplate, i.e., anything that needed to be filled in. Yes, the escrow office’s document preparer will impatiently tap her nails on the table. Ignore her. In our case, I had run all of the mortgage numbers and talked extensively with our mortgage broker, so I knew what all of the numbers in the escrow documents should be. With the escrow worker sighing heavily as my husband and I diligently plowed through the paperwork, I noticed an incorrect loan amount. The escrow worker seemed so surprised to be told that there was an error, but she checked and sure enough, it was wrong. At least it took her less than a minute to print out a new copy of the page.

    6. Get good insurance. As soon as we closed on our townhouse, we got an insurance policy that covers up to $50,000 in HOA assessments. HOAs can levy substantial assessments to cover repairs (I believe it was common after the 1994 Northridge earthquake), so we pay approximately $500 a year for a policy we hope we’ll never need but will be very glad to have if we do. (Isn’t that the case with all insurance, anyway?)

    Image via FreeDigitalPhotos.net by Stuart Miles.


    Banner via Escalate Media Network

    Updates: New car & a new mortgage

    Just a couple of quick notes this morning:

    We bought our new car yesterday. I’ll post about the process in detail once I’ve had the time to write it up, but for now, I’ll just note that dealers hate selling cars without options! But I’m happy with the deal we got and with the car, too.

    We don’t have a new mortgage yet, but rates are sliding down, so I’m keeping a close eye on them. As I calculated back in February, a lower interest rate could save us thousands over the long run, since we intend to remain in our house for next thirty years. But I think rates would need to fall to 5.4% before I start the ball rolling on a refi. (The rate today is 5.66%.) I’m keeping my fingers crossed!

    Image credit: Edmunds.com

    I’m considering re-financing our mortgage

    The recent rate cuts got me thinking about re-financing our mortgage (and I’m not the only one). We’re a few years into our 30-year fixed rate mortgage so rates would have to drop quite low in order for us to end up paying less total interest than we would pay with our current mortgage, assuming we re-financed to a new 30-year fixed rate mortgage. A 15-year mortgage is out of the question since it would raise our monthly payment, something I’m not interested in at this time.

    However, I came up with a scenario that makes re-financing quite attractive. It looks like we could save thousands over the years by refinancing now at a lower rate and then paying the same amount we pay on our current mortgage. Here’s an example:

    • Current mortgage payment: $1200 – Total interest paid after 30 years: $120,000; interest paid to date: $30,000
    • Mortgage payment after refi: $1000 – Total interest paid after 30 years: $100,000; total interest paid if monthly payment is $1200: $80,000

    Obviously, I’ve made up these convenient numbers, but the bottom line is that paying the basic monthly payment after a refi in this scenario would result in total interest paid of $130,000 versus $120,000 without the refi. However, continuing to pay $1200 per month after the refi results in total interest paid of only $110,000. That’s basically the position we’ll be in if we can get a good rate now.

    The problem is that mortgage rates have been going up. And we wouldn’t benefit from a refi at the current rates. But now that I’m aware of this scenario and there’s a possibility that rates might go down, I’ll be keeping an eye on rates and ready to pounce if they drop far enough.

    My experience with a home protection plan (aka home warranty) + an update on our washer

    When we bought our townhouse, our agent made sure it came with a home warranty from American Home Shield. We had been told during the inspection that the air conditioning unit was old and would need to be replaced sooner rather than later. Sure enough, during that first year of home ownership, our air conditioner died. AHS sent out a technician who went up to the roof, saw that ours was the only unit that hadn’t been replaced, and said, “You need a new one.” It wasn’t long before we had a new unit, which needed to be installed with the use of a crane.

    It turned out that shortly before we got our new air conditioner, my in laws got a new air conditioner as well, and also needed a crane for installation. When all was said and done, they had paid many thousands for their new air conditioner and its installation. We paid a service fee of $45 and something like $90 for the disposal of the old freon.

    Notwithstanding the complaints I heard from friends about the shortcomings of their home protection plan (which usually involved a “this isn’t covered”), AHS seemed like a pretty good deal to us.

    It’s now several years later and we’ve had many more experiences with AHS. We don’t really have any major complaints – the work that hasn’t been covered is clearly stated as not covered in the written contract. And the work that has been covered has been fine. What we’ve discovered, though, is that there’s a fair number of things that aren’t covered, as stated in the contract.

    The Washer Update
    And then there’s our washer. When I mentioned previously that we’ve had someone out to fix it multiple times, I was referring to someone sent out by AHS, since our washer is a covered appliance. The service fee is now $55, so each visit that’s occurred more than 30 days after the last one has cost $55 (visits within 30 days of the first visit are covered by that service fee). As I said, they’ve been out multiple times for the same problem. The washer is very old, but it does work fine after it’s been repaired, at least for a while. But even though the same technician has come out, he’s never once suggested that a new washer might be in order. (Part of the warranty is that if the appliance is not repairable, they’ll replace it.)

    I didn’t feel that I could legitimately argue with the technician that he needed to tell AHS they owe us a new washer. After all, the washer is technically repairable. But I also wasn’t going to keep paying $55 every couple of months. At this point, Marc and I both reviewed the AHS contract and decided that it was no longer worth keeping. So I called AHS and was transferred to the retention department.

    I explained the problem and the representative, let’s call her Virginia, said she could see from their records that we had indeed requested a technician for the same problem six times in the last year. She also noted that we had been good customers for years and said she didn’t want to lose us over this. She asked if I would give her a chance to see what she could do. Since there’s only a couple of months left on our contract and our refund would be small, I said yes.

    Virginia was supposed to call me back but didn’t. I had to call her. At least she’d given me a direct number. She said that she’d spoken to several technicians and none of them could offer a good cause for the problem, except that perhaps I was improperly loading the washer and causing it to go out of balance. I told her that wasn’t the case, so she said she would send me two service fee coupons and that the next time I needed a repair, I should call her directly so that she could arrange for a different technician to come out. And I could pay with one of the coupons. All of this contingent on me not canceling the contract. I agreed.

    So that’s where we stand now. The washer will probably need repairing in the next 3 to 6 weeks, if history is any indication. I’ve decided that I’ll give AHS til the end of the current contract to either permanently fix the washer (which probably isn’t possible, given that the contract expires in two months) or to give me a new washer. If neither of those things happens, I won’t be renewing with them.

    In the meantime, I’ve discovered that buying an Energy-Star rated washer (like the one pictured from Sears) would get me a $250 rebate from LA DWP.

    Tips for Buying a Condo

    I’ve been thinking back to when we bought our townhouse. At the time, the San Fernando Valley was in its final recovery phase from the 1994 Northridge earthquake. After our offer on the townhouse was accepted, we wanted every document we could get our hands on to show the property was sound and the homeowner’s association had its act together. We received hundreds of pages of board minutes, financial statements, and other documents, which we pored over. It was boring as heck, but we knew how important it was to find out as much as we could while we could still legally back out. And we knew that the seller was required to make full disclosure.

    We discovered that there was some kind of fee assessment made by the homeowner’s association after the Northridge quake that the seller had been paying on a monthly basis, and we confirmed that the seller would pay off the assessment in full when we bought the property. I don’t recall getting any major details, but the assessment must have been for the overall property and not for damage to the unit itself, since we learned that only very minor repairs were required to our townhouse after the earthquake.

    Since buying our place, we’ve watched friends buy their own, and we’ve concluded that we bought very wisely – some of that was due to our care, but a lot of it was luck, too, since we were novice homebuyers. Here are my first-hand experience tips on buying a condo (keeping in mind that I’m no real estate expert):

    1. Take a good look at the outer property. Are the building and grounds well-maintained? When we went to check out our townhouse, we saw gardeners cleaning up the grounds and caring for the trees and plants. The pool looked clean. And the neighbors’ front doors looked neat as well. Contrast that to a friend’s condo, where getting repairs done was like pulling teeth and the pool was practically unusable.

    2. Ask for all of the homeowner’s association (HOA) documents available. Are the fees accounted for? Is there a budget? Are the minutes detailed or sketchy, and do they involve legitimate issues or the meowing of a neighbor’s cat at noon? It was reassuring to us to see that there were projected and actual budgets for the current and previous years. The amounts seemed reasonable, and there were funds set aside for future maintenance and repairs. Everything about the minutes indicated that the HOA was run by competent people who weren’t wasting everyone’s time and money.

    3. Have a competent real estate agent and/or mortgage broker. I loved our real estate agent and have recommended him without reservation to friends. He knew the business well, was straightforward with us, and never once got pushy. When he told us the list price of a condo, he also always told us the HOA fee. If there had been anything fishy going on, I’m confident he would have caught on and alerted us to it.

    4. Ask lots of questions. Our real estate agent and mortgage broker got used to hearing my voice a lot during the 30-day escrow period. I was always nice, of course, but I was persistent. I insisted on all of the HOA documents, and I remember there was some trouble getting all of them. Ask anything you can think of: what your exact monthly payment will be, the amount of the HOA fee, whether there will be a prepayment penalty, etc.

    5. Read everything you sign. It’s tempting to skip over all those paragraphs pages of boilerplate, but it’s important to read all of it. At least skim it for something out of the ordinary. And you should scrutinize anything that’s not boilerplate, i.e., anything that needed to be filled in. Yes, the escrow office’s document preparer will impatiently tap her nails on the table. Ignore her. In our case, I had run all of the mortgage numbers and talked extensively with our mortgage broker, so I knew what all of the numbers in the escrow documents should be. With the escrow worker sighing heavily as my husband and I diligently plowed through the paperwork, I noticed that one of the numbers was wrong. It was years ago so I don’t remember exactly, but I’m pretty sure she had put down an incorrect loan amount. She seemed so surprised to be told that there was an error, but she checked and sure enough, it was wrong. At least it took her less than a minute to print out a new copy of the page.

    6. Get good insurance. As soon as we closed on our townhouse, we got an insurance policy that covers up to $50,000 in HOA assessment. HOAs can levy substantial assessments to cover repairs, so we pay less than $500 a year for a policy we hope we’ll never need but will be very glad to have if we do.

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