New Construction

Building vs. Buying a Home

Fri, 3 Aug 2007 15:30:30 EST

Building vs. Buying a Home Building a new construction home or buying a resale home which is right for you?

If you're on the market for a home, you may be asking yourself whether it makes more sense to build a new home or buy a resale home. If you are looking to buy a home, it's a big decision. The answer depends on what is important to you.

Advantages of an existing neighborhood
Established neighborhoods with lived-in homes have much to offer. If the neighborhood has been around long enough, trees may canopy the streets and the landscaping may be lush and mature. It is hard to beat the charm of an established neighborhood that is already lined with well-loved family homes. It's a place you can easily imagine walking the dog or strolling with the family.

Another advantage of a resale home is that you can move in relatively quickly. With a new construction home, you often have to wait for construction to be completed. It could be six months or more, depending on delays from the weather or supply shortages. A resale home is ready at closing, often just 30 to 45 days after making an offer. That beats having to stay in a cramped apartment waiting for your home to be built.

There is also convenience involved with buying an existing home. You won't have to put up with construction traffic through your neighborhood as other homes are completed and you already know what surrounds your home.

Also, a resale home can usually be purchased at a better value per square footage than new construction. You often get more house for the money with a resale home.

Advantages of a new construction home
Like the idea of being the first to live in a house, picking out its features for yourself? Then new construction may appeal to you. Although new neighborhoods may lack certain charms of an older neighborhood, in many ways new neighborhoods may be more desirable.

The location of a new neighborhood is one of its best features. New neighborhoods tend to go up on the outskirts of town, where the new growth occurs in a community. That often means new schools for all of these new residents. It can also mean new shopping centers to accommodate that growth, too. You'll often find big box stores convenient to new construction neighborhoods.

New neighborhoods also tend to have great amenities. Today, everyone wants workout facilities, playgrounds, open spaces, swimming pools, etc. in a neighborhood. A resale home may not be able to offer much of that, but new construction homes often feature these amenities. Many new neighborhoods often have social functions centered around its pool, open spaces, etc.

Love a nice lawn but hate spending your Saturdays taking care of it? Well, a trend in new construction communities is to have lawn maintenance provided with your homeowner's dues. No more getting up early on Saturday morning to beat the heat to mow.

New construction homes also offer a chance to be friendly to the environment. New construction must be built to abide by the latest regulations, but that also means that they are usually more energy efficient than a resale home. That could equal savings to you each month on your utility bills.

Weigh the pros and cons of buying a resale home vs. building a new construction home. Know your tastes and what is important to you when making this decision. Then, go out and buy the home that is right for you.

Pre-Construction Condos: How the Process Works

Tue, 17 Jul 2007 15:30:19 EST

Pre-Construction Condos: How the Process Works When you buy a home that's not built yet, there can be setbacks before you move in. Here are steps to buying a pre-construction condo

Pre-construction condos are units that have been proposed by a developer, but have not yet been built. When you purchase a pre-construction unit, you are putting money down before construction begins.

Buying a pre-construction condominium can be a great opportunity, but you should proceed with caution. Because you are buying into something that does not yet exist, there is greater potential for unforeseen problems and setbacks before you move into your home. By understanding the risks and planning carefully, you can avoid complications and come out a winner.

Advantages

The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction.

Pre-construction condos can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you've paid for it before you set foot in the place. In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your home.

How the process works

There are several steps to buying a pre-construction condo. They can vary from developer to developer, but the basic components are:

1. Reservation agreement
You give a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (although the builder can reserve the right to change the price in the contract). The deposit is held in escrow and you can cancel the agreement at any time with a full refund.

2. Condominium documents
When a development is approved for construction, the developer submits condominium documents (including budgets, association rules, unit descriptions, materials and other important information) for approval by the state. Once the documents are approved, they are sent to you for review. Read them carefully to make sure that you will be comfortable living by the association rules.

3. Right of rescission
Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you don't, you can exercise your right of rescission and withdraw with a full refund.

4. Hard contract
If you don't withdraw, you'll provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.

5. Closing
When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date, and you will be ready to enjoy your new home.

This article was originally published at http://www.lendingtree.com/smartborrower/New-homes/Buying-a-condo-pre-construction.aspx

What to Ask When Buying a Condo Pre-Construction

Tue, 17 Jul 2007 15:30:19 EST

What to Ask When Buying a Condo Pre-Construction Buying a condo that hasn't been built yet poses its own set of risks. Learn what details you should find out about before you sign that contract.

While most people would never sign away tens of thousands of dollars on a car sight-unseen, they do exactly that with real estate all the time. Many homes and condominiums are purchased before the builders ever sink a shovel into the ground. Visiting a model home may give you an idea of what the finished product will be like but it's not the same as touring the real thing.

Buying a pre-construction condo is also different from buying a pre-construction home. In most cases, a homebuyer will have some degree of say in the design and layout of their planned home. A condo buyer rarely has this luxury. Beyond flooring and surfaces, the design of the unit is generally left to the discretion of the developer. Concerns that seem intangible at the time of purchase -- proximity to neighbors and waste disposal, for example -- can become unavoidably real after you move in. But it's hard to think about all the potential problems when you're basically purchasing a spot of empty space.

Purchasing real estate of any kind is a big decision. Here are some questions to ask when buying a condo that hasn't been built yet.

What's being done to enhance the soundproofing?
While you've no way of finding out how noisy your neighbors are going to be until after you've actually moved in, you can ask what steps the developer has taken to improve the building's soundproofing. Depending on where your unit is located, you may have people living above, below and on either side of you. Sound transmission -- be it airborne sounds coming through the walls, or impact noise from high-heeled shoes coming the ceiling -- is a common complaint about condo life.

Most modern condos are well soundproofed, but there are still certain things that are well worth asking about. You can request to see a floor plan of your neighbors' units to determine which common walls you share and which of their walls connect with which rooms in your unit. Also, if possible, try to find out if your upstairs neighbors have opted for wall-to-wall carpeting -- an option that's less conducive to sound transmission than bare hardwood flooring.

How close will my unit be to common areas?
Many areas of a condo are shared by all of the tenants. Find out ahead of time if your unit will be situated on, or near, the front vestibule, meeting/party room, gym, elevator or stairwell. People tend to be less careful of noise in shared areas than they are inside of their own unit, and a raucous celebration in an adjoining party room or people tromping up and down nearby stairs could keep you up at night. If your unit will be situated near a noisy part of the complex, ask if it may be possible to get a price discount.

Where will my unit be in relation to sanitation and laundry facilities?
Being near the laundry, sanitation room or pool can pose noise- and smell-related hazards. You could end up living in a condo that constantly smells of bleach, chlorine or cleaning supplies. If your unit backs onto the parking lot or alleyway behind your complex, make sure you ask where the dumpsters will be placed. A balcony becomes significantly less charming if it offers a scenic -- not to mention fragrant -- view of a building's trash, especially in mid-summer.

What is the building's expected occupancy?
Be sure to ask how many people you'll be sharing the services and amenities of your condo with. Do some math: Will a laundry room built for five washers and dryers be big enough if a quarter of the tenants opt to do their laundry on a Sunday afternoon? If the gym has only three treadmills, how long might you have to wait after work to get onto one?

Also, ask about what the expected ratio will be of owners to renters. Owners are more likely to take better care of their units than renters. As a result, it can sometimes be more difficult to secure financing for a unit in a condo with more renters than owners, or you may be charged a higher interest rate on a mortgage. A good owner-to-buyer ratio is 3:2 or better.

What are the rules and regulations?
Unlike private home ownership, condo ownership is subject to certain rules and regulations pertaining to the use of both common areas and individual units. Condos can place restrictions on just about everything from the number and type of pets you can have (if any) to what kind of renovations you're allowed to undertake on your unit. Some even place restrictions on how many guests you can have at one time. Get a list of all of these rules and see if any of them are unreasonable or potential deal-breakers.

By asking the right questions, you can get a better understanding of what a condo is going to be like after it's built. And, hopefully, knowing what to expect will help you avoid having any unpleasant surprises.

Housing Co-ops

Wed, 23 May 2007 15:30:23 EST

Housing Co-ops Cooperative housing can provide an affordable alternative, plus the chance to build up equity.

Formal housing cooperatives, or co-ops, have become a vital component of urban housing in the U.S., particularly since the 1960s. Today, more than 1.5 million American families live in co-ops ranging from low-income apartment buildings to luxury town homes to entire housing communities. When you buy into a housing co-op, you buy much more than four walls and a roof -- you buy into a way of living and a ready-made neighborhood.

In fact, you don't actually buy the four walls and roof of a co-op home. What distinguishes buying a co-op from purchasing other forms of real estate is that you are buying shares or membership in a cooperative housing corporation. It is the corporation that owns or rents the real estate. Unlike standard rental housing, however, your monthly share loan payments help you accumulate equity in your co-op share. And, generally speaking, buying a co-op share is more affordable than buying real estate, which makes it an attractive choice for those with limited resources.

Getting a share loan

Share loans are available through banks and credit unions in much the same manner as standard mortgages. They are also known as co-op mortgages, co-op apartment loans, or end-unit financing, depending on where you live. In order to qualify for a share loan, lenders typically expect you to make a down payment of five to 10 percent of the purchase price. Like a mortgage, the loan is then amortized over a period of years, and each month you pay back the loan with interest.

Are there other fees?

Closing fees are lower for share loans than they are for mortgages. The sale is treated as the transfer of personal property (the stock certificate or cooperative ownership contract) rather than the transfer of land, so land transfer taxes do not apply. You should expect to pay additional monthly fees, however, for maintenance, similar to the way condominiums charge monthly fees. The fees vary according to the co-op, and may also include insurance premiums, utilities and real estate taxes. The good news is that even though you aren't paying the real estate taxes directly, you can usually still deduct your share of the tax payments and mortgage interest on your personal income tax return. (Consult a tax advisor about your situation.)

There are three types of housing co-ops, each with slightly different characteristics:

Market-rate housing cooperatives: Buying into this type of housing co-op is the most similar to buying a condominium or single-family home. The share price is determined by fair market value. Accordingly, this type of co-op has the potential to allow you to build up the most equity.
Limited-equity housing cooperatives: In a limited-equity housing co-op, there are restrictions on the amount sellers can get for their shares when they leave the co-op. The co-op housing corporation places these limits in order to ensure the housing remains more affordable. Members benefit by receiving below-market interest rates on loans, breaks on real estate taxes and other cost-saving measures. The co-op bylaws may also set a maximum income limit for new members as a method of ensuring the housing is accessible to families in need.
Leasing (or zero-equity) cooperatives: In the case of a leasing co-op, the co-op housing corporation doesn't actually own any real estate, but rather, leases it from an outside investor. As a result, it doesn't build up any equity. In some case, if the property eventually comes up for sale, however, the corporation may buy the property from the investor and convert the co-op into one of the other two types of cooperatives.

This article was originally published at http://www.lendingtree.com/smartborrower/Finding-the-right-home/Housing-co-ops.aspx

Universal Design for Your Home

Wed, 23 May 2007 15:30:23 EST

Universal Design for Your Home You don't have to be over 50 to benefit from universal design changes.

Have you ever noticed how much easier it is to open a door with a lever rather than a knob? Have you ever wished you didn't have to bend over so much to reach items on the bottom cupboards or to unload the dishwasher? Do you have enough light to read food labels and recipes?

These are all issues that universal design seeks to solve. The basic idea is to make homes more accessible to all people, regardless of ability or disability. But secondarily, universal design works to provide that accessibility without being obvious or, quite frankly, ugly.

You've probably heard of universal design if you have been reading about how baby boomers are influencing new home design as they age. And it's big business, involving everyone from builders to designers to manufacturers.

Builders of housing for people 50 and older say most universal design features aren't even noticeable to the average buyer. Or, if they do notice, they think about the design feature's convenience, not how down the road they might need the wider doors or hallways to accommodate a wheelchair or walker.

One reason many universal design features seem to blend into a home could be that the push is coming as people adopt a more casual lifestyle. In a new home, that often means open floor plans that make it easier to get around. You might be less likely to notice that, for example, hallways are 36 inches to 42 inches and doorways are 32 inches to 36 inches wide - other than being pleasantly surprised that it's easier to move your furniture in.

With universal design, you'll find light switches and electrical outlets higher on the wall, and thermostats lower. There won't be steps going into the house, and the master bedroom will be on the ground floor.

Interested? Here are some other universal design features to look for as you shop for a home, according to the Center for Universal Design at North Carolina State University:

--Rocker light switches.
--Task lighting throughout the home.
--Loop handle pulls, not knobs, on cabinets.
--Levers, not knobs, on doors.
--Pull-out shelving and corner-cabinet Lazy Susans.
--Windows that can be opened or closed easily with one hand.
--Dishwashers placed on pedestals.

You also can search for homes with taller toilets, sometimes called handicapped toilets. They are 16.5 inches to 18 inches tall, compared with 14 inches to 16 inches for standard toilets. The taller seats are easier on knees, legs and backs, but don't look out of place in the average bathroom.

Builders also are putting in curbless showers and showers with built-in seats. Plumbers can install scald protection systems that keep water from getting too hot if someone falls and hits the hot water control.

To learn more about universal design, go to Center for Universal Design's Web site: www.design.ncsu.edu/cud/. The AARP also has a number of articles about universal design available on its Web site at www.aarp.org/families/home_design/universaldesign/.