Advice Archives | Page 2 of 6

What is the difference between a fee simple home and a condominium

Searching for town homes and row homes can be confusing to buyers with FHA or other low down payment mortgages

Low down payment buyers are often surprised to learn that a condominium might not be a good fit for their loan program. Single family homes are not always affordable in areas where buyers are looking, so looking for town-homes might work – if you can find the right one. Some townhomes are just like single family homes as far as ownership is concerned; and others behave more like condominiums. Learn about the differences in the video:

Mortgage interest rates don’t vary much between lenders like they can with credit cards or car loans

Mortgage interest is consistent among various lenders

A client asked me about shopping around for mortgage rates this week. She thought that mortgages were similar to car loans or credit cards and that they could vary greatly depending on your credit score and credit blemishes. In reality, mortgage interest rates among lenders are pretty similar. However other features of the mortgage can change such as mortgage insurance, down payment and other terms. Check out the full video:

Hesitant to sell in today’s market because you’d also have to buy? Not so fast…

Conventional wisdom has it that when you sell, and might buy in the same market, you’ll be buying in the same market conditions as well. You’d be mostly right, but not always. It pays to have a grasp of what’s happening in different segments of the market and take advantage when conditions are right.

At the moment, the South Florida market is pretty hot. Single family home inventory is low and good inventory sells quickly – often with multiple bidders. If you’re trying to buy in the “Sweet Spot” right now – between $300,000 and $500,000 – you’re probably having challenging time. It’s even more competitive if you’re shopping for a single family home below $300,000 – the market is best described as “insane.”

But what if you’re in a position to “move up?”

You bought your current home a few years ago or more, and you’ve taken great care of it. Today you find yourself seeking more space, perhaps a pool, or more bedrooms? Your current home that you bought for $250,000 is now in that magical sweet spot and should sell for $400,000 – that would be amazing, wouldn’t it? Except you’re worried that selling at the top of the market means that you’ll also be buying at the top of the market? Maybe not so. This is why having an expert in in the market can pay big dividends for you.

That new home priced between $500,00 and $700,000 might be a pretty good deal right now. The market for homes priced higher than yours is not as hot. Sluggish even? Check out the stats…

Your current home priced between $300,000 and $500,000 is clearly in the heart of “Seller’s Market” territory. However take a look a that $500,000 to $700,000. Almost into “Buyer’s Market” territory.

Check out the next slide. Non-distressed homes priced between $500,000 to $700,000 are even further into the “Buyer’s Market” territory. See what I mean? There’s opportunity here for a buyer in just the right situation. Could that be you?

Check out the last slide: Current market conditions are favorable in several price ranges to take advantage of a hot market to sell in, and a sluggish market to buy in. Despite the lower total number of sales in the $200,000 to $300,000 price range, the number is primarily due to lack of decent inventory. Price increases in the same range are steep. So if you’re ready for a leap into the $500,000 to $700,000 price range, moving up from nearly any price point is advantageous.

The same can be said for moving from $750,000 into any price point over $1-million. If you might be interested in a condominium priced over $1-million the market is truly your oyster. Sluggishness in the new-construction market has caused developers to offer a slew of new incentives to capture a dwindling number of buyers that are interested in luxury condos.

I have more information available and if there’s a particular segment of the market that you are interested in, please reach out. I’d be pleased to share what I have.

Your home insurance will cost more in South Florida than your lender estimate

I love it when a blog post writes itself. This was a conversation I had with clients who were seeking insurance on their new home in anticipation of closing in a few weeks.

Hey Bob, you can get back to me tomorrow, no rush whatsoever. I just realized the quote you sent me is 2000 higher than what my mortgage broker factored in. So that will make my mortgage about $170 more per month and I don’t want that obviously. Do I have any options and if I do what do you think is best?

Yeah – about that…

Your mortgage broker should have known.

Most mortgage brokers in the country use an estimate of what your home owner insurance will be of around 1% of purchase price. Per year. Divided by 12 of course to get your monthly cost. So I could have forgiven a national mortgage broker for doing it that way.

But your mortgage broker is local. She should have known better but perhaps I’ll give her the benefit of the doubt because her company is a national company and maybe their system for generating Good Faith Estimates won’t let her change the number.

But alas we live in hurricane country. And we picked an old house without any hurricane protection. (Which was sorta given considering our price range.). But yeah – this is what home insurance costs down here. It’s breathtaking.

I’ll send your info to another insurance broker and see if he can come up with a better quote/policy but it won’t be much better – like the best I would wager is like $500 less.

I think we went over this once – but of course we went over a bewildering amount of info along the way. I usually coach my clients to plan for 2% as the cost of insurance rather than the piddly little 1% estimate. Better safe than sorry.

What if i was to pay the amount up front? Could i do that? Like for the whole year?

Oh no – wait for it…..

YOU ARE! Twice!

You’ll be paying for a year of insurance up front at closing. AND you will be paying monthly for it. Because you have to pay a year up front and then escrow enough money to pay it again next year. It will be required by your mortgage company. If you made a HUGE down payment, the lender would let you pay your own. But on a nearly-nothing down mortgage the lender wants to be absolutely positive that the bill gets paid every year. So they escrow for it. Taxes too.

Christ on the cross….ok, got it.

Or is the better question: CAN I sell my timeshare in Florida?

I get questions from colleagues around the country asking for referrals here in Florida for agents that can sell a timeshare. Since it’s the magical time of the year when folks start planning for their winter get-aways down to Sunny Florida, here are my tips for buying, and selling, a timeshare.

Plan Ahead and Buy Smart

The first thing to know is that you will over-pay for a timeshare if you buy from the developer or the on-site agent. There’s a tremendous markup for the developer when selling timeshares right on the property. However in established timeshare communities there are often timeshares that can be found on the secondary market for less than half the price the developer is offering, and can be as low as a dollar. Yes. $1. A buck.

But don’t forget that your timeshare costs far more than the purchase. The annual fees can amount to thousands of dollars. Typically around $7,500 per year.

Check out eBay timeshares and see for yourself: http://www.ebay.com/sch/Florida-Timeshares-for-Sale/15897/bn_18950828/i.html

When buying, consider forming a Limited Liability Company to take title to the timeshare. Friends of mine have purchased several timeshares in the name of the LLC and when they decided they didn’t want the timeshare anymore, they just stopped paying the maintenance fees on it. Eventually the timeshare company will take the timeshare back although they won’t want to. The LLC limits the liability to the assets of the LLC so the timeshare company can’t come after you to pay the monthly maintenance in arrears.

If you haven’t planned this far in advance, you probably own the timeshare personally.

You might be able to try the same tactic with the timeshare management company – stop making your monthly maintenance payments and try to negotiate for the company to simply take the timeshare back. However this isn’t always successful and you could wind up with derogatory marks on your credit report because of the late payments. At the very least, expect that your account will be turned over to a collection agency and that they will begin a campaign of merciless harassment by phone and mail to get you to pay your past-due maintenance fees.

Sell with a timeshare liquidator

One of the largest timeshare selling companies is Sell My Timeshare Now: www.sellmytimesharenow.com however this is more of a listing company for folks trying to sell “By Owner” on their own.

Another is Buy a Timeshare: www.buyatimeshare.com. This company is more like a listing company that charges a fee to broker your timeshare sale.

There are a few companies that will purchase your timeshare from you – often times at a huge discount. But if you just want to get out from under the maintenance charges, this might work for you. They come and go so quickly my recommended companies are no longer in business but a Google search should turn something up. Just make sure that during the transaction, the company takes on full responsibility for the maintenance and any other payments.

There is a Timeshare Users Group with loads of user-generated content about selling un-loved and un-used timeshares. www.tug2.net

Last but not least is Redweek: www.redweek.com where users can post their timeshares for sale or for rent, or try to GIVE them away to other users.

Is your timeshare worth anything?

Do your research. A great website to see if there are recent sales in nearly any timeshare resort is Sharket: www.sharket.com

Avoid the scams

Since we have already determined that a local Realtor may not be able to handle the transaction, and you’re anxious to be free of the monthly maintenance and other responsibilities, know that thousands of other folks are in situations just like yours. Watch out – there are probably dozens of timeshare peddling scams going on at any given time. A good rule of thumb: don’t deal with a company that has any upfront costs higher than $100. You really should only need to pay a “By Owner” type of marketing company for the use of its website, its promotional prowess and good name. You should only pay a company that works as your “Agent” in facilitating your sale after the transaction is successfully consummated or closed.