Buying your first condo is a wonderful, scary experience! As with any home purchase you need to
1. Check your credit
Unless you plan on paying cash for your condo you will need a mortgage. If you have any credit problems, fix them BEFORE you apply for a mortgage. As an ex-bill collector I know that an inquiry from a mortgage company on your credit bureau, and a consequent call to me…meant they turned you down for a mortgage until you clean up the bad debts. In most cases we would give a discount, sometimes of more than 50% depending on the age of the debt, if someone called us up out of the blue to pay off a charged off debt.
When we would see that mortgage inquiry it meant NO discount AND maximum fees. Why? Because we knew if you wanted that mortgage there was no need for us to beg or tempt you with a huge discount to pay off an old debt. Sometimes we might compromise and give someone 10-25% off the debt, but it was NO WHERE near what we would give that person if we hadn’t known about the mortgage.
2. Get pre-approved for a mortgage
How much can you afford? You don’t want to start looking, find a place you love and then find out you don’t qualify. Also when you put in an offer and can provide proof that you are already pre-approved for a mortgage, it will make your offer stronger. Even if you find yourself in a bidding war, most homeowners will go with the person with the financing in place, and not the It’s a good idea to get pre-approved for a mortgage loan first before you start shopping for condo units. That way you know exactly what you can afford. Thus, you will know exactly how much budget you can afford and wouldn’t have to waste time looking at units that are out your budget’s range.
To get a pre-approval, order a copy of your credit report from the three major credit bureaus at least six months prior to your loan application. This will give you enough time to work on improving your score, in case you need to. Should you find errors in your credit report, you can ask the bureaus to delete all incorrect information which can badly affect your credit rating. Remember, a higher credit score will open better opportunities for you.
3. Make a list of “MUST HAVES”
Have a clear idea of what are the most important features your home should have. When I was buying my condo I knew what part of town I wanted to live in. On the top of my list was location. You can always upgrade a unit if it doesn’t have the granite counter tops you want, but you can’t change its location! If you have children, you may base your decision on the school district you want them to be in. The top 5 things on my list were
- Extra cost like HOA dues
- Building amenities
Granite counter tops and such didn’t make my top 5 (but where in my top 10) simply because I know as the daughter of a “house flipper” you can add those later. Sometimes its even better to have to upgrade since its your choice and style of upgrade and not someone elses. Of course if you have to upgrade remember that’s not cheap. You have to factor that into the house price. The cheapest kitchen renovation my dad ever did was for $8,000 and that was just for new counter tops, flooring, buying a new fridge and refurbishing the cabinets. Keep in mind he is in California, and he gets a STEEP discount since he tends to buy in bulk. So the cost of these upgrades will vary based on your location.
4. Examine the condition of the building and its HOA.
When I was looking a building that I loved, I found out that several of the current owners in the building where suing the builder and the HOA for shoddy workmanship. Lots of problems with the plumbing and crumbling drywall in some units. Right away I knew that even though the unit “I” looked at was beautiful. There was a good chance that within a few years it would be crumbling down around my ears! Also when you buy into a building where there are pending lawsuits you need to be aware that your HOA fees may rise if the HOA loses and is found liable.
When purchasing into a building with an HOA make sure you know what your fee covers. Do they hold insurance for just the outside of the building? If the building is new or recently renovated, what kind of warranties have been given. You really don’t want to buy into a building with a lot of problems or pending lawsuits. As a buyer, you need to seriously consider if you are paying the right price not just for the unit you are offered, but for the rest of the building as well.
5. Choose Your Agent Wisely
Never discount the benefit of working with an agent. I know some people think they can find a condo on your own, and you can. There are lots of sites that give you access to the MLS in your area. The benefit of working with an agent that is familiar with the area of town you want to move to is that they know the area from another prospective. They sell property or help homeowners sell their property in the neighborhood you want to live in.
When I was searching for an agent I went thru 3 agents before finding the one I felt could represent my interest the best. Don’t feel obligated to just go with the first agent you meet! Also don’t feel obligated to go with someone a friend refers to you. I learned the hard way to go with my gut! I had an agent that in middle of a bidding war decided to wait until the next morning to submit my counter offer, even though the other agent said it needed to be in by 5pm the previous day. I lost the condo in the building I wanted to live in. I found out from the other agent that my counter was higher and his client actually hoped the winner of the condo would back out so he could accept my offer! I of course fired my agent and decided to interview several other agents before I finally found one that I thought “got me”, understood what I was looking for, and was aggressive enough that I knew my counter offers wouldn’t sit on his desk!
Believe me, you will regret working with a bad agent, one that isn’t familiar with the area you are buying in, or one so busy that its hard to get them on the phone. Don’t be shy! INTERVIEW YOUR AGENT!
6. Read the homeowner’s association’s document.
Once you offer has been accepted, the owner needs to give you the HOA documentation. Read it! You need to know and understand the rules of living in your building.
Did you know that in some complexes leaving your trash can out over night is a violation? Or leaving your garage door open all day could be considered a violation? Do you work at home? Some HOAs won’t allow clients to come to your home, or only allow it during certain hours of the day.
Like parking out front of your home? Check your HOA docs! This can be a violation also! Not all HOA are strict, but some are and you need to be aware of this. Once you have your HOA docs you have a few days to sign off on them stating you agree. If you don’t agree you can back out of the deal. Keep in mind you are on a time limit. If you wait 3 weeks to read the HOA docs and then find that you don’t agree, you won’t be able to cancel your condo purchase.I hope you found this article helpful. Enjoy your condo hunt!
Updated July 15, 2016
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