Every rose has its thorns. Some of the drawbacks to condo living include: * Rules, rules, rules. Rules, rules, rules. You'll be subject to a document called the master deed or Declaration of Covenants, Conditions, and Restrictions (CC&Rs). This sets forth not only rules for the community association management to follow, but rules governing all owners. You'll be told what you can do in the common space, and even what you can do with or in your own unit. You'll be subject to a document called the master deed or Declaration of Covenants, Conditions, and Restrictions (CC&Rs). This sets forth not only rules for the community association management to follow, but rules governing all owners. You'll be told what you can do in the common space, and even what you can do with or in your own unit.* Buy for less, sell for less. Buy for less, sell for less. Condos generally appreciate at a slower rate than houses. Condos generally appreciate at a slower rate than houses. Diet-Time for Fido? Diet-Time for Fido?

What kinds of things do CC&Rs limit? Common examples are:* whether you can have a pet, and if so, its maximum height or weight* whether you'll get a parking space, or whether your guests can park in the lot* whether you can change the color of your curtains or paint the outside of your unit* the location or appearance of things like your mailbox, clothesline, TV antennas, and wreaths* how long visitors can stay with you* whether you can rent your unit to someone else, and* whether you can smoke in your unit.

* Privacy. Privacy. Since you'll be sharing common areas and usually walls or ceilings, too, you'll be giving up some privacy. Also, if having a large outdoor space to garden, entertain, or keep a pet is important, you might be frustrated by the outdoor spaces, which are usually either miniscule or communal. Since you'll be sharing common areas and usually walls or ceilings, too, you'll be giving up some privacy. Also, if having a large outdoor space to garden, entertain, or keep a pet is important, you might be frustrated by the outdoor spaces, which are usually either miniscule or communal.* You share all costs, whether you want to or not. You share all costs, whether you want to or not. It may be frustrating to see your monthly membership dues spent on things you never use, like the swimming pool. And if you're the kind of person who can live without a repair until you have spare cash, tough luck-you'll be forced to pay your share on the association's schedule, sometimes in excess of your regular fees. It may be frustrating to see your monthly membership dues spent on things you never use, like the swimming pool. And if you're the kind of person who can live without a repair until you have spare cash, tough luck-you'll be forced to pay your share on the association's schedule, sometimes in excess of your regular fees.* It can cost more than you expect. It can cost more than you expect. In addition to your monthly membership dues, you may have to pay additional fees called "special assessments." These are one-time fees collected for major purchases the association can't afford to make with its current reserves (for example, to replace the roof). Do your research: In recent years, with many new buildings not fully occupied, the few owners in some CIDs have found their special assessments very high. In addition to your monthly membership dues, you may have to pay additional fees called "special assessments." These are one-time fees collected for major purchases the association can't afford to make with its current reserves (for example, to replace the roof). Do your research: In recent years, with many new buildings not fully occupied, the few owners in some CIDs have found their special assessments very high.

TIP.

Size matters in condo developments. Your experience will be a lot different in a Boca Raton megaplex than in a Brooklyn brownstone. In a building with fewer units, you may find the rules less constricting-but you may also be more responsible for day-to-day-operations and costs. Your experience will be a lot different in a Boca Raton megaplex than in a Brooklyn brownstone. In a building with fewer units, you may find the rules less constricting-but you may also be more responsible for day-to-day-operations and costs.

Townhouses and Duplexes: Benefits and Drawbacks

One compromise between a single-family dwelling and a traditional condo is a townhouse. Townhouses are usually built in rows and share at least one common wall (also called "row houses"). Like single-family houses, each townhouse owner has title to the building and the land it sits on. Like condos, townhouses may share some common areas, governed by a community association (but unlike condos, the community association usually owns the common area).

Just be sure, when you start househunting, to find out for sure what type of property you're looking at. If a careless ad or agent calls a property a townhouse, but it's really a condo, you'd own a little less personally (because the land isn't yours, nor is the outside of your unit) and should pay less accordingly.

Celebrities Who've Owned Co-ops Owned Co-ops Among the big names who've made a co-op home (or maybe one of their homes) are Jimmy Fallon, Chloe Sevigny, Sean Combs (a.k.a. Diddy), Matthew Perry, and Kelis.

Co-ops: Benefits and Drawbacks

Co-ops sounds so glamorous, don't they? But what are they, other than swanky apartments in New York City for the rich and famous?

Like condos, co-ops are defined by their ownership structure. When you own a house or condo, you own a piece of physical property. When you own a co-op, however, you own shares in a corporation. The corporation, in turn, owns the building you live in, and you get a proprietary lease to live in a specific unit within the building. The lease allows you to live there as long as you own your shares and spells out any restrictions on your use of the unit.

As with any corporation, your shares also give you voting rights. Shareholders elect the board of directors, who make most of the decisions and manage daily operations or hire staff to do so. The shareholders pay a monthly "maintenance fee" to cover these and other costs. Usually, the more desirable the unit a shareholder has, the higher the maintenance fee.

Because of your limited ownership and other financial issues (discussed in Chapter 6), co-ops are sometimes difficult for the average first-time homebuyer to afford. The limitations also mean that co-ops haven't appreciated at the same rate as condos in the past few years.

Factory Made: Modular and Manufactured Homes

Buying a prefabricated home no longer means living in an insubstantial-looking box. In fact, it's a creative possibility and a growing trend. Modern, multistory dwellings, now known as "modular homes," are built in blocks in factories and transported to properties, where they're fully assembled to comply with local building codes. If you decide to buy a property and build a home on it, a modular home might be a relatively low-cost option.

However, you'll have to consider additional expenses like transporting the home; getting the proper permits and access to utilities and sewer lines; hiring professionals for installations; and adding features like landscaping, driveways, or fences. A local contractor may be able to give you a brief overview of the costs, players, and timeline.

Million-Dollar Mobile Homes?

Yes, you'll find them in Malibu: Even the rich and famous (like Minnie Driver) sometimes retreat to manufactured home communities.

CHECK IT OUT.

Check out modular homes styles, from the traditional to the ultramodern, at: from the traditional to the ultramodern, at:* www.modularcenter.com * * www.mkd-arc.com * * www.cusatocottages.com (the famous "Katrina cottage") (the famous "Katrina cottage")* www.maplehomes.com.

Another low-cost option is the manufactured house, once commonly referred to as a mobile home. These too have come a long way. Manufactured homes comply with federal building standards but aren't constricted by local or state building codes.Manufactured homes are typically transported to communities of other, similar homes, and the owners lease the land the homes sit on. If the lease is terminated or the land is sold, the owners can be required to leave and take their homes with them. Since a lot of the value of a home is in the land, these homes tend to lose lose value over time, and moving one may cost more than it's worth. Manufactured homes are often more difficult to finance, too. The bottom line is that they're low-cost options to more permanent properties but don't usually offer the same equity-building advantages. value over time, and moving one may cost more than it's worth. Manufactured homes are often more difficult to finance, too. The bottom line is that they're low-cost options to more permanent properties but don't usually offer the same equity-building advantages.

Putting It All Together: Your Dream List

Now it's time to fill out what we call your "Dream List." This is a handy worksheet where you'll write down your "must haves," such as number of bedrooms, size or type of house, neighborhood, maximum price, and anything else you consider a minimum requirement in a home, such as a garden. There's also space for you to note your "would likes," features you'd prefer but could live without or possibly add later (such as a deck). Of course, expressing your preferences doesn't mean you'll get get all of them. But later, when you're out househunting, carrying a copy of your Dream List will help make sure you keep your priorities straight. all of them. But later, when you're out househunting, carrying a copy of your Dream List will help make sure you keep your priorities straight.

Ooh! I forgot about the washer and dryer! I've been dreaming about that my whole New York life!Carrie, Sex and the City Sex and the City

The Dream List also includes a section for things you absolutely won't accept, under any condition, such as a kitchen with bad lighting. You might need this reminder one day, when you find a house that's perfect in every other respect.

TIP.

Check in with your partner. If you're buying the house with another person, make sure you assess your priorities and complete the Dream List If you're buying the house with another person, make sure you assess your priorities and complete the Dream List together together. It won't help to make a list of priorities, only to find out they're in direct conflict with your fellow buyer's.

Put my practical needs as a single woman first. Hope thought she was looking for a cute Craftsman with wainscoting, high ceilings, and a yard. "In fact," she says, "I almost bought a house that fit my supposed ideal. But at the last minute, I realized it wasn't going to work. My work hours don't leave time for home maintenance, and my safety was an issue in that neighborhood. So I switched gears and bought a late '80s townhouse with a drive-in garage with direct access to the house, in a nicer neighborhood. It's architecturally boring, but I'm comfortable there, the homeowners' association deals with most of the maintenance, and I haven't had a moment's regret." Hope thought she was looking for a cute Craftsman with wainscoting, high ceilings, and a yard. "In fact," she says, "I almost bought a house that fit my supposed ideal. But at the last minute, I realized it wasn't going to work. My work hours don't leave time for home maintenance, and my safety was an issue in that neighborhood. So I switched gears and bought a late '80s townhouse with a drive-in garage with direct access to the house, in a nicer neighborhood. It's architecturally boring, but I'm comfortable there, the homeowners' association deals with most of the maintenance, and I haven't had a moment's regret."

CD-ROM.

The "Dream List" can be found in the Homebuyer's Toolkit on the CD-ROM. A partial sample is shown below. A partial sample is shown below.

Dream List

Dream List Directions

This Dream List includes the more common features found in many homes, but you can add others to this list (perhaps a must-have hillside location with a view) or delete some features. Add as many details as you want in the left-hand column ("General Features"). At the end of the Dream List, there's a section for those things you absolutely will not accept, under any condition. There's also a section at the end for notes, such as comments about a particular house or neighborhood-something you want to be sure to remember, such as a quiet location at the end of a cul de sac. These last two sections are not shown on the Sample Dream List, but they are on the complete form, which is available on the CD-ROM.

Fill in the "Must Have" column with your minimum requirements and the "Would Like" column with features you'd prefer but could live without. For example, for the "Number of Bedrooms" feature, you might write "3" in the "Must Have" column and "4" in the "Would Like" column. For some features, you can simply place a check mark to show that yes, you must have or would like that feature (such as a dishwasher). In some cases, you'll add additional information: For example, you might put a checkmark indicating that a house meets your upper price limit, and then note the actual price of the house. If a "Must Have" can be added when you move in, such as a deck or second bathroom, you can also note this.

If you fill out the left columns of the Dream List now and print more copies, you can use this sheet over and over again. Each time you visit a house, simply write in the address and note how it compares in the right-hand column ("This House"). Save copies for homes that seem like good possibilities.

What's Next?

Now that you know what features you're looking for, it's time to figure out whether you can afford them all. In Chapter 3, we'll explain how a lender is going to evaluate your finances and what you should do to evaluate them yourself.

CHAPTER 3.

Does This Mean I Have to Balance My Checkbook? Figuring Out What You Can Afford

Meet Your Adviser Russell Straub, a former mortgage broker and founder, President, and Chief Executive Officer of LoanBright, a mortgage intermediary service based in Evergreen, Colorado, whose services involve two websites, a former mortgage broker and founder, President, and Chief Executive Officer of LoanBright, a mortgage intermediary service based in Evergreen, Colorado, whose services involve two websites, www.loanbright.com and and www.compareinterestrates.com.

What he doesHelps LoanBright serve its goal of giving homeowners a convenient way to find the right mortgage broker as well as a loan with favorable terms. Homebuyers visit the companys website, Compare interestrates.com, enter some basic information, receive a list of lenders or brokers and available loan terms, and consent to being contacted. At the other end of the transaction, LoanBright helps mortgage brokers (particularly sole proprietors or independent ones) meet these potential clients.

First houseIt was a condo in Boston, a 350-square-foot studio-big enough for me, by myself. I bought it during a run-up in real estate prices-at the peak, as it turned out! I was working as a manufacturing engineer and didnt know a thing about real estate. I chose my mortgage broker because she lived two floors up from me in my apartment building, but she managed to shepherd me through. Although the 1980s real estate crash hit not long afterward, I held onto the place. In fact, even though I now live in Colorado, I still own the condo and rent it out, and it has since tripled or quadrupled in value.

Fantasy houseRight on the ski slopes at Vail. I already spend some time there, but not enough. If youve been there, you know the style Id like-wood, European looking, with a wood-shake tile roof, ski in/ski out.

Likes best about his workMy short commute from home is great. Also, I like how each of us at LoanBright brings something different to the table, with varying interests and viewpoints, which we can combine into something new. Im also conscious of the fact that we have the ability to change the lives of the solo or small-business mortgage and loan brokers whom we consider our primary customers. Many of them are honestly struggling-some are single moms-and its a competitive business, with more people doing the jobs than there are transactions. Were trying to do the right thing for them. Its also satisfying to be able to help homebuyers get competitive loan quotes, potentially saving them thousands of dollars on their new mortgage.

Top tip for first-time homebuyersDo your homework. Read about the process, ask your questions, and talk to more than one broker and lender. It can take a while to get the hang of it. But I read a survey recently saying that consumers booking a hotel room online spend an average of one hour or more selecting a hotel. If homebuyers would spend a proportionate amount of time researching their prospective purchase and mortgage, theyd come out way ahead. But Ive met many who spent less than an hour getting educated about buying a home!

CD-ROM.

For more tips from Russell Straub, check out his audio interview on the CD-ROM at the back of this book.

Up to this point, we've been able to focus on the fun stuff-finding out all the great reasons to buy a house and imagining what the new place will look like. Now it's time to take a step into the world of finances-nothing that will require an accounting degree, fortunately. You may be wondering why we're even bringing up boring financial stuff before you've started seriously househunting. That's what a mortgage broker is for, isn't it?

But wouldn't it be horrible to put an offer on a house and begin shopping for a loan, only to discover that you couldn't qualify for the amount you needed or the terms you expected? Even worse, what if you were able to get a loan, but discovered after moving into your new home that you'd borrowed more than you could handle-at least, without moonlighting?

Don't Play the Multiplication Game You may have heard of a formula where you multiply your household's gross annual income by two and a half to find out how much you can afford to spend. This may be fun and easy, but it won't help you draw realistic conclusions. It fails to factor in important things like how much debt you currently have, the terms of your mortgage, or how much you already have saved for a down payment. If you really want to guess how much you can spend before reading this chapter, you're better off using a reliable online affordability calculator like the one at www.nolo.com/calculators.

Getting familiar with your finances before there's a prospective property in sight-even if you just sit down for an hour or two-will show you how much you can realistically afford to spend and prepare you to choose the best possible loan. This chapter will help you by: * explaining the costs of purchasing a house* demystifying the process mortgage lenders use to decide how much you can borrow* providing simple ways to calculate what you can really really afford based on your lifestyle and finances afford based on your lifestyle and finances* showing you how to boost your financial profile, and* explaining what it means to get preapproved for a loan and why you should do so.

If you've already found a place and are trying to figure out how to pay for it, don't skip this chapter. A quick look at your finances will still help you decide whether your prospective home's cost is within your budget and whether you're likely to get the loan terms you're counting on.

Beyond the Purchase Price: The Costs of Buying and Owning a Home

Buying a house means some new expenses beyond the purchase price. A first-time homebuyer should plan to drop some cash for: * the down payment* the loan principal, loan interest, taxes, and insurance* up-front costs, mostly to close the deal, and* recurring ownership costs.

The exact amounts of these expenses depend on you, the house you buy and where you buy it, and the type of mortgage you get. But even if you can't predict exact amounts, understanding these expenses and what drives them will save you some sticker shock.

Do We Have Have to Talk About Money? to Talk About Money?

We know, all this talk about numbers makes watching an MP3 download seem fascinating. But if you're one of those people who never balances a checkbook, this exercise is even more important-unless you think it's worth thousands not to deal with the hassle. If you pay just half a percent more than you could have if you'd done some research-say, 7% instead of 6.5%, on a 30-year, fixed-rate mortgage for $200,000-you could end up paying almost $24,000 more in interest over the life of the loan.

Down Payment

You may be plunking down a hefty chunk of change, in the form of a down payment, to buy your home. The amount depends on how much you've saved, the terms of whatever loan you get, and the house price. Conventional advice says your down payment should be 20% of the house's purchase price, but don't think you're done for if you don't have that much: Many first-time buyers don't.

Tick, Tick, Tick Finding the house you want to buy might not take as long as you think. According to a 2008 survey by the National Association of Realtors, the typical homebuyer spent ten weeks searching before settling on a house.