Buyer's Checklist
Be ready... be informed!

Buying a home is not just about pricing and negotiation. A great deal of the process has to do with how well--or how poorly--a buyer is prepared for making the purchase. This preparation does not need to take a great deal of time, and most of it can be done from the comfort of your current home or office, but it is important to spend some time getting ready before running off to look at specific homes. On this page you will find discussions related to preparing to buy a home as well as links to more articles and in-depth information.

Know your reasons for buying a home. Don't simply make assumptions here--"everyone needs to own their own home," "it is the best investment possible," "I simply MUST have a new home" may be perfectly acceptable reasons if they fit your personal situation. First of all, it is a good idea to remember that a home is just that--a place where you can live. Yes, there can be some wonderful advantages to home ownership, including pride and accomplishment, potential tax advantages and the build-up of equity. But it is generally a mistake to attach too much importance to the advantages and not enough to what should be the primary reason: A home is a place where you live. By knowing precisely what your reasons are for buying a home, you will be much more likely to keep everything in clear focus.

Spend some time analyzing your budget and finances. Although there is much emotion involved with purchasing a home, the financial aspects should never be underestimated.

Know exactly how much home you can comfortably afford. Listen to no one but the voice of your own budget. Your lender, your Real Estate Agent, and perhaps even your boss may have a vested interest in you paying as much--or more--than you should. Don't fall into the currently popular trap of overspending for a house only to find yourself miserable because you have made yourself house poor. See the sections on prequalifying and preapproval and the chart to determine your qualifying ratios and affordability.

Familiarize yourself with the mortgage process. Learn about the different types of mortgages that are available and the sources for mortgage loans. Be aware of potential pitfalls and mistakes you may encounter during the mortgage process. See the section devoted to the entire mortgage process.

Distinguish between needs and wants. In 21st Century America, the words "want" and "need" are, for too many, interchangeable concepts. They aren't--they have quite different meanings. Not understanding the difference and believing that a "want" is actually a "need" can be both expensive and find you purchasing a totally wrong type of home.In general, a need is something that is required. A want is something that is desired. See more discussion in the article devoted to distinguishing needs and wants.

Get familiarized with home inspections. A whole house inspection not only can prevent problems by discovering defects in a home, it can be a valuable source of information on home maintenance and repairs. For more information, see the sections on house inspections.

The development of a household budget is a desirable activity both before you make a Real Estate purchase as well as consistently during your ownership. By preparing a budget while you are looking at homes, you can better focus on mortgage payment goals and how the new house will affect your total expenses. Maintaining a budget during the time you own the home can help to prevent potential financial disasters as well as point you in a money saving direction so you have more funds available for those things that you need or want.

You will need a little time to develop your budget--it's not a five minute exercise--but should not take longer than a few hours if you gather the necessary information first. Get everyone who will be involved in spending involved in developing the budget.
Some of the items and information you will need to develop your budget are:

Be realistic in your budget assessment. Make provisions for possible increases in some items (for example, school tuitions, insurance and taxes). Then, look for ways to get (and maintain) control over your budget. If you would like a few hints about saving money--now and in the future--see our saving money section.


Most People Spend 10% More Than They Make! You probably know how much money you made last month, but do you know how much money you spent? Or do you know how much money you have left to spend this month? If you don't you're not alone, most people have no idea. The fact is most of us spend 10% more per month than we make. That comes out to $431 per month based on the average American income. No wonder the average credit card debt is now at $8,500!

So why is it so difficult to track spending? Today we live in a near "cashless" society. Using debit cards, credit cards, automatic deposits, and wire transfers we rarely even see our money. It's easier than ever to spend, spend, spend!

Getting your Financial Picture in Focus

Here's some important advice: as soon as you have made the decision that you want to buy a house, one of your first steps should be to make certain that you have a clear picture of your financial situation. At a minimum, you will most likely want to do the following:

Run a Credit Report to make certain that there are no discrepancies or problems in your credit history.

Do an analysis of your current financial situation: where the money comes from (your total income) and where the money is presently going (your current spending). Develop a household budget for your current situation. Get into the habit of using it on a consistent basis!

Keep your spending patterns in check.

Do an analysis of how a house purchase will affect your budget. Be sure to factor in not only mortgage payments (including insurance and taxes) but also funds for items such as repairs and maintenance.

Begin to gather items such as: last 3 years Income Tax returns, current copies of pay stubs, records of any past derogatory credit history that has since been paid off, and records of any supplemental income you may have. If you are self employed, you will need all business records and tax returns for the last 3 years. Having these items close at hand will save an enormous amount of time when the Mortgage Company begins to ask for them (and ask for them they will!)

If it is possible to do so without adversely affecting your down-payment situation, pay off minor debts. The less debt you have the easier your Mortgage "sailing" will be.

Do not incur any new debt. Many mortgage applications have been stopped in their tracks because the applicants had decided a week before the application that a shiny new car with a big finance or lease payment would look just perfect in the driveway of their new home. Since mortgages are based on debt to income ratios (the amount you pay out monthly versus the amount you bring in) a newly acquired debt could be enough to throw the ratios off and make the mortgage unobtainable.

Tips on Saving Money

Going hand and hand with an effective household budget is saving money on those things that you truly need. To start saving, take an inventory of your needs to see where you can shave the dollars. Begin with the biggest items first, where the most potential for savings is, and move down the scale to the less expensive items. A moderate savings on one of the big items (houses and cars) combined with savings on the smaller items (food, clothes, etc.) can reap a large reward in your total budget. The following are some thought starters:

General Tips

Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants for needs. Needs are pretty simple to identify--those items that are necessary to sustain: Shelter, food, clothing, transportation. Wants are those things that enhance or possibly improve our family life. A car is a need. Unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people don't see it that way. Have you ever heard (or said) "I absolutely need...?" when the actual meaning was "I really want?" This is not to suggest that you shouldn't be able to have the things you want--only that to delude yourself into believing that a want is a need--and busting your budget in the process--is a recipe for financial disaster.

Is less better? Perhaps it was due to the booming economy, perhaps "keeping up with the Joneses", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits.

Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after!Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)

Specific Tips
The Big Ones

House Mortgages. In all probability, your mortgage will be the largest single expense in your budget. Obviously, getting the best deal here is of ultimate importance. Not comparing could cost you thousands of dollars over the term of the mortgage. An excellent resource for comparisons is Lending Tree, where you can submit one easy and quick loan request form and within 3 business days get up to 4 offers from competing lending institutions.

Cars. For most families, the next biggest expense is their car(s). Mistakes made here can often be as costly (on a monthly basis) as mortgage miscues. Take a look at the vehicle(s) you presently own. Do you own too much vehicle for your needs? Do you have equity in a car that you no longer use frequently? Could you downsize and save money, not only in monthly payments but also in maintenance, insurance and operating expenses? With the vehicles that you do own, are you getting the best deal on your repairs, maintenance and insurance?

And the Smaller Ones that Add Up

Insurance. Most of us pay our automobile and homeowners insurance premiums by habit, rarely if ever making comparisons. With many families insurance costs totaling over $2000 a year, even a 15% savings equates to $300 annually. Some hints from the Insurance Information Institute on saving money on your homeowners insurance include:

• Be sure to shop around. It may take a little time, but it could save you money. The insurer you select should offer both a fair price and excellent service.
• Raise your deductible. Deductibles on homeowners policies typically start at $250. By increasing your deductible to $500, you could save up to 12%.
• Beef up your home security. You can usually get discounts of at least 5% for a smoke detector, burglar alarm or dead-bolt locks.

For automobile insurance the Insurance Information Institute recommendations include:

• Shop around.Prices for the same coverage can vary by hundreds of dollars from company to company, so it pays to shop around. Surf the net, ask your friends or call your state insurance department for ideas about companies and agents to contact.
• Ask for Higher Deductibles. By requesting higher deductibles on collision and comprehensive (fire and theft) coverage, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive cost by 15% to 30%.
• Take Advantage of Low Mileage Discounts. Some companies offer discounts to motorists who drive fewer than a predetermined number of miles a year.

Food. Not only do you need to eat food to live, the expense of it for the average family can eat you alive! Since food is a necessary and recurring expense, just saving, for example, $20 a week on your purchases can convert to over $1000 in savings over the course of a year.

• Try to plan in advance. By knowing what you need, you will be able to buy in larger quantities (almost always less expensive) and cut down on convenience food purchases (always more expensive).
• If you use national brands, spend a little time clipping and using coupons. $1.50 invested in the Sunday newspaper could save you $20 or more at the checkout. Organize the coupons by type, so as you develop a shopping list you can make a notation if you have a coupon.
• Consider store brands or generics. You may find the quality is equal to (and sometimes better than) the national brands, and store brands/generics are generally considerably less expensive.
• When it is on sale, stock up. Of course this only applies to those items that you use on a regular basis. Stocking up on an item which you use once a year doesn't make sense (and robs you of spending money, not to mention shelf space).
• Shop at the store that is the cheapest overall. Surveys have shown that there is sometimes as much as 10-15% difference on identical grocery orders at 2 different stores in the same area. If you spend $500 a month on groceries, that can equate to $600 to $900 a year in savings. Don't throw away your money just because it is your habit to shop at a certain store.

Clothing. Although many consumer items have actually reduced in price over the last few years (most notably, computer and electronic items) the cost of clothing has seen a continuing upward spiral. In addition, a purchase price that not too long ago bought a good quality garment now seems to buy virtually "throw away" clothing. With some planning, though, it is possible to maintain clothing purchases that are in line with your family budget.

• Buy separates that coordinate. You can make numerous combinations with a few well matched items. For women, jackets, slacks, skirts and blouses can be mixed and matched to create many different outfits. Plus you can change the look of these outfits with accessories such as jewelry or scarves. Men's clothing offers a wide variety of separates that can be coordinated: blazers, slacks, shirts and ties can all be interchanged to create a versatile wardrobe with a minimum of expense.
• Buy a season ahead. Buy next year's winter clothes at the end of this season and save. The styles won't change that much (if at all) and you will pocket a big difference in the price.
• If you are "hard" on clothes, buy quality. Buying an $80 pair of shoes that will last saves money in the long run instead of having to buy 3 pairs of $35 shoes that don't hold up.
• Stay away from trendy fashions. Stick with the basics. You can always be sure you clothing styles will last from year to year when you buy perennial stand-bys such as medium length A-line skirts and solid tailored blazers for women or neutral color shirts and tailored to semi-tailored sports coats for men.

Telephone.In most areas of the country, your local phone service is currently regulated and has a fixed price. The difference in long-distance costs, though, can be eye-opening. Many consumers simply stick with their current long-distance carrier because it is convenient and they feel that it would be a hassle to change. By shopping around, however, you may find some considerable savings that can really add up. We were able to find a plan that gives savings of about $16.75 a month and $200 a year, a fairly considerable amount. Switching over was simple and not time consuming--a pretty good return on time spent!

Comparisons. It used to be that comparison shopping was a long and drawn out process. Driving from one store to another or making numerous phone calls could be a real time waster. Even if you were able to make an adequate comparison, sometimes it wasn't worth the hours you needed to invest to get the comparison. The Internet has changed much of that. Now you can make quick comparisons on most items, usually within a matter of minutes. What would once have taken hours to accomplish now happens at the click of a mouse, a real time and money saver. Don't forget online resources. For example, a site such as Ebay could save a lot of money for a couple of reasons: First, you can make comparisons among a number of sellers and second, you may be able to find second-hand merchandise which can save you a bundle.

Travel. Price differences here can be enormous. The difference in costs on the same trip--same airline, same hotel, same car rental--between two travelers can run into the thousands of dollars. Take a little time to comparison shop to assure the best possible deal. Some travel resources that we've found effective include Travelocity, Expedia, Orbitz and Priceline .

Agent--An individual who represents a seller, a buyer or both in the purchase or sale of real estate.

Amortization--The schedule of loan payments that establishes the amount of payment to be applied to the principal and the amount to be applied to interest, usually on a monthly basis, for the full term of the loan.

Annual Percentage Rate (APR)--The TOTAL interest rate of a mortgage, including the stated loan interest as well as any upfront interest paid in securing the loan. The APR will invariably differ from the mortgage rate quoted due to the inclusion of these items.

Appraisal--An estimate of value of a Real Estate property by a professional third party. Virtually all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer.

Adjustable Rate Mortgage (ARM)--A mortgage in which the Interest rate is adjustable, meaning that the rate can go up or down according to prevailing financial market conditions.

Assessment--The value of a property as determined by the local tax jurisdiction which is used to determine the amount of your property taxes.

Buyer's Agent--A Real Estate Agent that has made an agreement to represent the buyer exclusively, rather than the seller.

Comparable Market Analysis (CMA)--A comparison of the prices of similar houses in the same general geographic area. A CMA is used to help determine the value of a property, either for a seller or a buyer.

Closing--The process that effects the final transfer of the deed from the seller to the buyer, as well as finalize all aspects of the mortgage of the property.

Closing Costs--Funds needed at the time of closing (separate from and in addition to the down payment). Loan origination fees, discount points, Attorney fees, recording fees and pre-paids are some items that may be included. They often will total from 3% to 5% of the price of the home, payable in cash.

Contingencies--These are conditions--or "safety valves" written into Real Estate offers and contracts to prevent a buyer from being forced to buy a house that is unsatisfactory--either structurally or financially. Examples of contingencies are "This contract is subject to the buyer obtaining a satisfactory whole house inspection." or "Subject to the buyer being able to obtain a mortgage."

Condominium--Housing where the owner owns only the unit in which the live--from the interior walls inward, generally--as well as a portion of the common area.

Debt to Income Ratio--The ratio of a borrowers total of debt as a percentage of their total gross income.

Deed--The document that, when recorded with your local government, determines ownership of a property. Transferred from seller to buyer at closing.

Earnest Money--Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.

Equity--The difference between the value of a property and the total of any outstanding mortgages or loans against it.

Escrow--Funds held in reserve both prior to closing (for example the earnest money and deposit) by a third party and after closing by the mortgage company to pay future taxes and homeowners insurance. In some areas, "escrow" also refers to the closing process.

Fixed Rate Mortgage--A mortgage loan where the interest rate is established at its origination and continues unchanged through the life of the loan.

FSBO (For Sale By Owner)--Real Estate that is sold without the assistance of an Agent. FSBO can refer to both the individual selling the property "They are a FSBO," or the property itself "that house is a FSBO."

Foreclosure--The process through which a lender takes back property from a defaulting owner and re-sells it.

Homeowner's Association--An owners group, whether in a condominium, townhouse or single family subdivision that establishes general guidelines for the operation of the community, as well as its standards.

Inspection--A whole house inspection of a home being considered for purchase which looks for defects in the property.

Interest--That portion of a mortgage payment that is the "charge" for using the lender's funds.

Lien-- A legal claim against a piece of property that can prevent it from being sold unless the lien is satisfied (paid off). Liens can be filed by unpaid contractors or other debtors in a legal process so that they will be paid when a property is sold.

Listing--A property for sale by a Real Estate Brokerage and Agent.

Loan Origination Fee--A charge imposed by the lender, payable at closing, for processing the loan. See Points.

Lock-in--An agreement by the lender at the time of mortgage application or shortly thereafter, to write the mortgage at a specific interest rate, whether rates rise or fall up to the date of closing. Obviously a good move if rates are rising, not so good if they are falling. Lock-ins have specific expiration dates, such as 30, 60 or 90 days in the future.

LTV (Loan to Value)--The ratio of the amount of the mortgage as a percentage of the value of the property.

MLS (Multiple Listing Service)--A listing (almost always computerized) of all the properties for sale by Real Estate Brokerages in a given geographical area.

PMI (Private Mortgage Insurance)--Required on virtually all conventional loans with less than 20% downpayment. Although the payments for PMI are included in your mortgage payment, it protects the lender should you default on the loan. On FHA loans, you will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose.

Points--1 point is equal to 1% of the loan value, paid at closing. Points can be loan origination fees or "discount points" which reduce the interest rate of the loan (you are actually paying a finance charge up front). When a lender, for example, quotes a rate of 8 1/2% with 1 + 1 points, 1 point is for the origination fee and 1 point is for the discount fee.

Prequalification--The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage you qualify for.

Pre-paids--Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.

Principal--The amount borrowed for a mortgage loan. Your monthly mortgage payment will be applied to both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).

Property Tax--An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property assessment. Generally paid as part of the mortgage payment.

Recording--The act of entering deed and/or mortgage information into public record with your local government jurisdiction.

Sub-Agent--A Real Estate Agent who is working with a buyer but who represents the seller in the transaction.

Title Insurance--Protects your title--your ownership rights--from claims against it. Paid at closing, title insurance may be the responsibility of the buyer, the seller, or both, depending on what is traditional in your locality.

Warranty--Covers either most of the house in a new home, or selected items (for example the heating and air conditioning system or the water heater) in a used home. Warranties can vary widely and are optional in used homes (paid for by either the buyer or the seller).

Zoning--Laws that govern specifically how a zoned area can be used. For example, an area may be zoned for single family residential, condominiums, commerical or retail, or a mix of two or more uses.

Probably one of the reasons that buying a home is such an emotional experience is because of the fact that not only do you have the actual house buying to deal with, but for most home buyers you also have the mortgage process to encounter. This can be a smooth and almost uneventful process, or an unnerving one. A great deal depends on the preparation of the buyer as well as the selection of an efficient mortgage company.

One of the most common misconceptions that is shared by a large number of home buyers is that when working with a Real Estate Agent, he or she will "automatically" represent you as a buyer. As we will discuss, unless this is specifically disclosed in writing, in all probability the Agent will be representing the seller.

The traditional relationship (probably going back to when the first thatched hut was sold by someone other than its owner) has been that a Real Estate Agent's primary loyalty was to the seller of the property. This relationship was in effect whether the Agent was the listing agent or working with a buyer. This situation caused many home buyers to be confused: they assumed that the Agent that had been driving them around showing them houses for the last 3 weeks was representing them. In reality, the Agent was representing the owners of the houses they saw, and was bound to reveal to those owners any information he or she knew about the buyers.

Buyer Agency, which is almost universally available now, changed all that. The buyer now often has a choice in representation: the Agent with whom they were working could continue to represent the seller in the transaction, or the Agent could represent them as buyers. The buyer is now able to compete on a more level playing field.

Although there are state to state variations (please verify the situation in your particular locality), the following is a basic summary of the types of agency, and who the Agent represents.

SELLER AGENCY:The "default" situation. Unless disclosed to the contrary, all Agents involved in a Real Estate transaction (and their Brokers--with whom a listing agreement is actually with) represent, and owe their allegiance, to the seller. If you contact an Agent who has a property listed, that Agent will always represent the seller.

BUYER AGENCY: When an Agent represents the buyer, that Agent "rejects" the implicit seller agency and thus owes loyalty to the buyer.

DUAL AGENCY: This occurs when 2 Agents--or the same Agent--working for the same Broker each represent a buyer and a seller in a transaction. This situation must be disclosed to both the buyer and the seller. Privileged information (e.g. the price that a buyer will pay or a seller will sell at) cannot be disclosed to the other party without the express permission of that party.

Since the commission for the sale of a house is almost always paid for by the seller, buyers are able to get assistance and information from Real Estate Agents, usually at no cost to them. It is for this reason that the vast majority of home buyers employ the services of an Agent for their purchase. In addition, since most houses are listed by Real Estate Agencies, it gives them the maximum number of available properties to consider.

The relationship between a home buyer and a their Agent is a little like a marriage: it must be based on trust, mutual goals (to get you the house that best suits your needs!) and understanding. To a large degree, the home buyer entrusts the Agent to always keep their (the buyer's) interest first and foremost. It is important that you understand who the Agent with whom you are working represents.

By far the most common form of housing in North America is the single family detached home--ranging from 600 square foot bungalows to 6000 (or more) square foot sprawling mansions. The most important distinguishing factors that determine a single family dwelling are that it sits on its own piece of land (which is sold part and parcel with the home) and it is not attached to anyone else's residence. With single family homes, your home pretty much is your castle. Subject to neighborhood and subdivision regulations and ordinances, you can do with it as you wish. Want a different exterior color? Usually you can accomplish that (taking into account the fact that the neighbors may not be receptive to a purple house with ecru trim). Need more room and want to add on? Subject to the codes of your jurisdiction, you may be able to expand your living space.

You will probably have a yard of some sort--from "postage stamp" size up through multiple acres, and your ownership will include all of it. In effect, when you buy a single family home your purchase will be of a parcel of land (your lot) on which sits a structure (your house).

• You like your "space." The idea of apartment living gives you the willies.
• The prospect of cutting the lawn, trimming the bushes and shoveling snow excite you (or at least don't send you headed for the nearest bridge.)
• You like the idea of modifying your home--changing the color, the appearance, the size. Having someone tell you that you couldn't do that would bother you.
• If you like, you are able to build a single family home (building a townhouse or condominium community gets a little expensive!)

Townhouses

Townhouses often can make an excellent "middle ground" between a detached single family home and a full fledged condominium because, to some degree, they offer attributes of both.

For purposes of definition, we will describe a townhouse as a home that is attached to one or more other houses, but which sits directly on a parcel of land that you also own (if you don't own the land, it is a condominium). For this discussion, townhouses can ranges from duplexes and triplexes all the way through huge townhouse communities consisting of hundreds of similar homes.

There is a good degree of variance in the way townhouse communities are structured. It may be a simple agreement (as is often the case of duplexes and triplexes) that each parcel of land and the home that sits on it is separately owned. In the case of larger townhouse communities, you will generally have an additional shared ownership in the common areas of the complex as well as any amenities such as swimming pools, park areas, etc. This ownership you will share jointly with all other townhouse owners in the complex.

In any townhouse purchase that involves an Homeowners' Association, it is vitally important to get as much information as you can, since the association can have a considerable impact on your ownership experience!

• You like the idea of your "space" but not having to deal with most exterior maintenance has even more appeal.
• A small backyard "retreat" or deck is just about all the yard you need.
• The idea of having neighbors close doesn't really bother you--you just don't want them above and below as well as next to you!
  
  

  Condominiums

  The easiest way to understand the concept of condominium ownership is to see at as an apartment you own (in fact, many condominiums are apartments that have been converted over the years). Your ownership extends inward from your interior walls, floors and ceilings. In addition, you are a partner, with all of the other owners in the complex, of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities (for example, swimming pools, clubhouses, tennis courts, play areas, etc.)
  
  One of the requirements of condominium ownership is the payment of a monthly condo fee, which covers general repairs and maintenance to the common areas of the complex as well as (hopefully) build up a cash reserve for future needs. In general, all exterior maintenance and repairs are the responsibility of the condominium association, although you will be charged for them, either through your association dues or a special assessment (a one time charge assessed to all owners for, as an example, a new roof). The normal day-to-day maintenance of the grounds (some examples are cutting the grass, shoveling snow and maintaining the pool) are also the responsibility of the association. Interior maintenance and repairs (for example, replacing a dishwasher) are the responsibility of the individual owner.
  
  In some areas, a condominium may be the only consideration that fits within your budget. The reason for this is simple. In general, the same square footage will cost less in a condo setting than it will in a single family home or townhouse, due mainly to land cost--you can build many more condos than you can single family homes on the same amount of land.

  Condominiums

  Advantages		Disadvantages
  You will be responsible for little or no exterior maintenance or repairs.		You will be responsible for payment of Condominium Association fees.
  Many condominium communities offer amenities (pools, play areas, tennis courts, etc.) you may otherwise not be able to afford.		You give up more privacy when compared to single family homes as well as townhouses.
  Condominiums are often located in locations convenient to centers of employment and shopping.		You only own from your interior walls inward. The rest of the structure and all of the land is owned in common with the other condominium owners.
  Condominiums are often more reasonably priced than other forms of housing.		When it is time to sell, it can often take longer to sell a condominium.

  
  Is a Condominium for You?
  • You want absolutely nothing to do with exterior maintenance and repairs.
  • You like the idea of amenities (swimming pools, tennis courts and the like) but you don't like the idea of having to pay for them on your own.
  • You like the safety of numerous and nearby neighbors.

Townhouse and Condominium Associations

If you have never attended a Homeowner's Association meeting--whether for a townhouse or a condominium association--you many not be aware of how pervasive they can be and how important it is that you investigate an association when you buy a townhouse or condominium.

The Homeowners' Association has a number of duties and responsibilities. It will be responsible for not only the day-to-day operation of the complex, but also for long term planning. It is this association that monitors adherence to the various restrictions--for example what modifications you can or can't make to your unit--for the entire complex.

Repairs and Maintenance

In general, the association will take care of all of the exterior upkeep of the buildings and grounds. This can vary a little from association to association, so it is important for a condominium or townhouse buyer to have a clear idea of exactly what will (or will not) be covered, so as to not have a big surprise when you find out that you--and not the association--are responsible for some needed exterior repair or maintenance.

Covenants, Restrictions, and "Don't Even Think About It"

Every condominium and townhouse association is required to file a declaration of covenants, conditions and restrictions. Simply put, this document discloses precisely how the homeowners' association is to be structured, exactly what its duties and responsibilities are, and what restrictions are to be placed on all owners as to acceptable modifications and improvements to their individual units. This document will be specific--for example, it may state that no owner can make any modification to the color of doors or windows, or may even stipulate what type of interior window coverings in the way of curtains and drapes that are acceptable. The goal is to have as much uniformity throughout the complex as possible.

The Financial Health of the Association

One aspect of the association that you will want to investigate closely for any townhouse or condominium that you are considering is its financial condition. Associations are required to develop an annual budget for both income (homeowners' fees) and expenses, as well as the current state of its financial condition. The more solvent (the more cash reserves available) an association is, the more protected the homeowners are. If there is a lack of cash reserves and an expensive repair becomes necessary, there is only one place for the association to go to get the needed funds: To the homeowners via a special assessment (a one time charge to all members of the association).

Building a House

Building a house can be one of the most satisfying--or aggravating--activities that home buyers can undertake. The difference between building a dream house and a "nightmare on Elm Street" has a great deal to do with being certain that building a house is the right option for you and then following through with many of the details related to building a house. See hints on building a house.

Some of the advantages and disadvantages of building a house:

If you decide that building a house (or buying a new one) is your best option, you will be confronted with a number of choices--there is no "one plan fits all" when it comes to new houses!

New house building choices:

Buying a new home that is already standing or currently under construction (a "spec"--built on speculation--house).

Building a house in a subdivision of new homes where a builder can give you a choice of plans.

Building a house from an established plan on a lot of your choice.

Building a custom built home.

Finding Contractors

Unless you are buying a house that is already standing or in a subdivision tract, you will most likely need to choose and employ the services of an architect and/or builder. Choose wisely. During the time that your house is being built, you will be spending a lot of time with these individuals!

Building a house often involves compromises. Many home buyers consider building because the feel they can't find the "perfect" house in the resale market. Be aware, though, that unless you have an unlimited budget, are building on a highly adaptable lot and are a great distance from your nearest neighbors, you will have potential compromises you will need to deal with. Some examples are:

Cost: What you want may cost more than you want to spend.
Lot: The lot you have selected may not be able to accommodate the type of house you want to build.
Building Codes and Regulations: How you want to build the house may not fit within the building codes of your locality.
Neighborhood Covenants: The neighborhood in which you want to build the house may have covenants or restrictions that limit the type, size or style of the houses within the neighborhood.

Hints on Building a House

Don't overbuild for the neighborhood. Having the biggest and most expensive house in the area may be wonderful for your ego, but it will be a disaster when it comes time to sell.

Build for resale. No matter how long you intend to stay in the house you build, it will have to be sold at some point (which is often sooner rather than later). Never build strictly for your own needs and tastes--a 1 bedroom 3 bath house may be perfect for you, but it will be next to impossible to sell.

Get the best contractor your budget will allow. When building a house, quality is usually more important than quantity.

Be prepared for delays. Building a house is a complicated project and utilizes dozens of subcontractors, workers and suppliers. Delays can--and probably will--happen, and that will back up the entire process. A delay, for example, in the framing stage stops everything: electricians and plumbers are unable to do their "rough-in" work until the framing is completed. Don't lock your move-in date in stone--it may be weeks later.

Monitor the progress of the house building as much as possible. During construction a lot can be accomplished--both positively and negatively--in a short amount of time. This is especially true during the framing stage. Catching a mistake early will save a lot of headaches later.

Watch your construction allowances. Generally, in the total cost of building a house you will be given allowances for such items as flooring (carpeting and vinyl), lighting, plumbing fixtures, etc. Make certain that you can actually get the materials you want within the allowance amount. For example, if you have a $3500 flooring allowance and the carpeting and vinyl floors you want will cost $5500, you are the one who will have to make up the $2000 difference. These "allowance overruns" can add up quickly! Finding Builders and Architects When you have made the decision to build a house, you have conquered an important hurdle, but definitely not the last one. Now you will need to find professionals to carry your plans from the idea stage to construction and completion of the house. If you are buying in an established subdivision, you may have to use a builder who has bought lots there, or you may be able to use one of your choice. If your are building a custom home, you will want to find and compare several architects and builders. Finding Contractors and Builders Unless you have plans of being your own general contractor (definitely NOT recommended if you are building your first home or unless you have extensive experience in dealing with subcontractors) you will need to find a contractor or builder to build your house. Finding a builder is not that difficult. Finding one that you have confidence in and who can meet your budget requirements takes a little more work. One source of information is those you know who have recently had houses built for them. Since the experience will be fresh in their mind, they will be able to give you a great deal of input regarding that particular contractor. Questions to ask: Would you have the builder build another house for you? (This one will probably tell you almost everything you need to know!) How was the quality of the work? Of the materials used? How was the relationship between the builder and the subcontractors? Was the house done on time? If it wasn't, was it the builder's fault? Finding an Architect or Designer If you want to start from "scratch" and custom build a house, you most likely will need to employ the services of a professional architect. An architect can take the photograph of the house that you have envisioned in your mind and turn it into a buildable blueprint. Just as important, an architect can not only make certain that your planned design is structurally sound but also make certain that it will meet the requirements of the various building codes in effect in your community. If you are also shopping for a contractor to build your custom house, having the design work completed prior to meeting with builders means that you will get accurate--and comparable--bids on the job. When a contractor knows precisely what they are going to be dealing with as far as square footage, design attributes and amenities, they will be able to much more accurately put a precise price on the project. There are a number of sources for finding architects and designers. Personal recommendations are a good way to go, since you will likely be able to get input as to ability as how easy they are to work with. Some of the questions that you should be asking when you are evaluating an architect or designer are: Was the design work done in a timely manner? When there were deadlines to be dealt with, were they met? Did the architect pay heed to your input? Did the architect work well with your chosen builder?                                                             Finding a Home There are probably few things in life that are as exciting--or as nerve- racking--as the search for a house. All the good emotions and the bad emotions seem to converge when the house hunting begins. Don't worry, this is a normal reaction, and is found in seasoned home buyers as well as those who are looking for their first home. With an organized house buying plan, you can minimize a great deal of the emotional impact. By determining your buying power, your wants and needs, and having an organized search plan, your chances of a stress-free experience are much better. TIPS ON FINDING THE RIGHT HOUSE     Once the decision to buy a home has been made, take the time to prepare before you go on your home search. For example, much of the information on this Web Site should be very familiar to you before you go looking for homes. Yes, it is very tempting to rush out and actually look at houses, but to do so without full preparation can be both disastrous and expensive. Get your financial house in order first! We can't stress this enough--it will save you an enormous amount of time, aggravation and heartache.   Determine what your budget will comfortably allow and stick to it. Don't spend yourself into a "house poor" situation. Get preapproved for a mortgage. This will not only give you a clear idea of how much a lender will approve for you, it will make your homebuying process a great deal easier (and save a lot of time later). Get familiar with the different housing types available to narrow your search. Determine your minimum requirements as well as any desired additional features--your needs and wants. Take note of any items that you don't want in a house. This can be just as important as knowing what it is you want in a home. Determine the desired location (schools, work, public transportation, etc.) Familiarize yourself with the mortgage process.       Don't just buy a home for your present needs. Make sure to take into account future considerations.   As you are looking, use a scorecard to compare homes. A scorecard is a great tool when it comes time for comparisons (and for remembering which home had which features!) Get familiar with the inspection process--especially the personal inspection aspect, so that you can weed out unacceptable houses quickly Maintain your perspective--and your cool! You may find an acceptable house on the first day--or the tenth. The important thing is to get the home that is best for you! Buying for the Future When purchasing a home--especially if it is a first home--many buyers get so caught up in the "here and now" that they totally overlook how the house may--or may not--fit into future plans and outlooks. Obviously, buying a home that fits into your current needs and wants is the main priority, but this should not eliminate ortotally overshadow an awareness that future needs and wants must also be considered. These future concerns should be addressed whether you plan to stay in the home for a considerable length of time or if you have plans of selling within a specific time frame. There are two costs that need to be considered in the purchase of real estate. First, of course, is the initial price of the home. Second, and just as important, is the eventual resale value. Therefore, to ignore the factors that affect resale (or your continued enjoyment of the home if you don't sell) is to be unaware of the true TOTAL cost of the home. With an eye to the future, there are a few important factors that play into the cost equation that should be considered when comparing and choosing homes, including: * Size * Location * Style * Trends Size Not adequately considering the size of the home can be one of the most expensive mistakes in your purchasing process. If you buy a house that is too big or small for the neighborhood, you will either be paying for size that you cannot recoup (too big) or face a more difficult sale at resale time (too small). Like many things in life, the middle ground is often the best and in this case, it is the house that is the best fit for its area that will bring the best return. Location As you have probably heard numerous times, location is usually the most important factor in the value of a home. When buying for the future, though, it is necessary to consider how location will affect resale value. For example, if development is moving in one direction in an area, it may be wise to buy with that in mind rather than buying in the area that is currently in demand. Be aware, though, that there usually is a limit to how far people will commute. To purchase outside of that "limit" can make a home much more difficult to sell in the future. In fact, in a number of are