We are seduced by the dcor, the ambiance, the view, and other visual effects when we are buying a condo but we should really be checking something else that is not visual.

Most of the time, the Home Owners Association or HOA plays a very nondescript part in the whole process of choosing a condo especially for first-time condo buyers. However, the HOA can play a very large part in using up your finances if you hit an unlucky situation after moving in.

If you want to avoid a surprise, then try to ask a few questions about the HOA. “Who’s running the show” is in fact one of the most important factors. When it comes to a very small condo complex, it may be run by residents but a professional management company is preferable, especially in a condo of any size.

When it comes to professional management companies, they do charge for their services but most of the time they can save this fee by obtaining lower quotes for repairs because they will use the same company many times. Aside from that, there is a chance of the company using their influence on resident votes, so they may be construed as more fair. Finally, instead of a part-time rush before each meeting is due, the HOA will run it as a business because to them, it is a business.

Asking to see the rules of the HOA, the financial report, the by-laws and the minutes of the last several meetings is something you should always do. The conditions, covenants and restrictions (CC&Rs) will affect your lifestyle, so make sure they ‘fit in’ with it.

The financial report will tell you if there are any big increases in the fees coming up, or if there are any ‘emergency’ fees due soon. What will happen if there is a big emergency is an important question that will be raised. How much money is in the HOA and how is it paid are other questions that will be raised.

Also important are the maintenance reserves and hopefully, there will be approximately one third of the gross annual fees charged to all residents in the reserves. Per condo, a favorable minimum amount would be $4,000 although it is manageable.

Another aspect that the HOA manages is the percentage of rental units allowable. Any more than 20% and the re-sale of the condos become risky since it is only passable if it’s under 20%. The reason why desirability is decreased is because most of the time, renters do not have the same respect for property. Mortgage companies are also aware of this and are reluctant to give out mortgages to high-rental complexes.

The moment that you have ironed out all of these questions, you can then consider whether you would like to get a professional inspection done. Included in these inspections are the common areas as well as the condo you are interested in. You will feel more secure to go ahead and make an offer when all of these precautions are in place.

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Most of the time, the closing costs are the last thing a person thinks of when buying a home. The costs of closing can be surprisingly aggravating even though it is the joyous moment when the home becomes yours.

When you purchase a home, condo or other property, you will go through a period known as escrow. During escrow, there are various issues which are related to the property transfer that are worked out. The closing day refers to the last day of escrow and you are going to be paying closing costs.

There are many forms in closing costs. For some, significant dollars are involved while others are relatively painless. Here’s a list of typical costs.

Escrow Fees

When it comes to an escrow agent, they are essentially a third party that works with the seller and buyer to finalize the transaction. The escrow agent will charge a fee for this assistance. It would depend on your area and the agent but you can expect fees from a few hundred dollars to around a thousand or so. Make sure you find out the fees before picking an escrow agent.

b) Home Loan

In the current market, obtaining a home loan is considered as a highly subjective event. A major cost associated with home loans are points. Points are essentially a fee you pay or have build into the loan for the privilege of being allowed to borrow money. A point usually equates to 1% of the loan. On a loan of $300,000, one point would equal $3,000. If you have excellent credit, you can shop for a loan that doesn’t require you to pay points.

3. Home and Title Insurance

Insurance for your home and title are a must. In case you are borrowing money to purchase the home, then each is mandatory. If your own funds is what you are using, then you should still get both forms of insurance. As each name implies, they provide insurance against issues involving your home and problems with the title transferred to you. Who doesn’t want to have a clear title?

4. PMI

If your down payment is less than 20% of the purchase price, then PMI or Private Mortgage Insurance is mandatory. A few hundred dollars a year in PMI is what you can expect to pay. Inspections, Appraisals and Miscellaneous Fees

You are going to use a variety of services to validate the property is your dream home in the home purchase process. With these services, there will be fees and you can also expect to pay for home inspectors, appraisers and the like. Depending upon the state you live in, many of these fees may be built into your mortgage. Regardless of all this, you still need to know exactly what you must pay for on closing day so you can budget accordingly.

Closing escrow, particularly if it is for your first home, should be considered as one of the happier days in your life. What you need to do is make sure that you know the costs associated with it so you don’t have to spend the day running around borrowing money.

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If you are one of those people who are considering to buy a home for the first time, then things can be a bit intimidating. Remembering that the benefits far outweigh the risks is what you can do.

Homeownership – the Benefits Outweigh the Risks

There are many benefits to owning a home. It’s true that there are the usual obstacles you have to get over. First, people don’t want to put that much money into it, they’d rather just rent.

Also, they don’t want to have to go through the lengthy process of buying the home and even searching for the right home in the first place. Then they don’t want to have to go through the mortgage process and go into debt to get the home. While these are definitely disadvantages, the simple fact is that there are so many major advantages to owning a home that going through these steps ends up being well worth it.

In owning a home, the most notable benefit would be equity. Equity is considered as the value of the home. When you are mortgaging a home, the down payment that you made on the home is the initial equity. As you make additional payments, your stake in the equity of the home rises (since the lender owns the rest of the equity). But considering the fact that equity also rises when the value of the home rises is important as well. This equity is solely yours, the equity of the lender does not increase.

This equity can be used for valuable things such as home equity loans and home equity lines of credit. These loans have low interest with the home used as collateral. Equity opens up many valuable new doors and is just one reason why owning a home is one of the best things you can ever do.

Another advantage is the tax savings. You can use every dollar of interest that’s paid in the mortgage payments as a tax write-off. This amount can be very considerable especially early on in the loan when the interest is front-loaded and there are a lot of money in taxes that you can also save.

What this comes down to is the simple fact that you do own a home. Knowing that home is yours means that there is a certain pride that comes with that. Owning a home is one of the most important things you will ever do. You should not pass it up and also avoid choosing to rent if you don’t have to. There are a lot of advantages when it comes to owning a home and you can’t just pass it up.

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