There are many questions that come up during the home buying process. Below are some buyer FAQs that we hear frequently.
General Questions
Generally a condo or townhome complex will have Home Owner Association (HOA) dues. Single family homes or duplexes may or may not have HOA dues but will have utility expenses, exterior maintenance costs and snowplowing. If you finance your home, you will have monthly mortgage payments. Even if you pay cash, you still have property taxes and home owners insurance to pay annually.
Home Owner Association dues vary, depending on the age of the complex and what they pay for. They almost always cover snow removal and trash removal, common area maintenance and insurance, water and sewer and cable TV. Some include heat. A few include electricity as well. Dues are usually higher if the building has an elevator or is at a ski area with “free” shuttle bus service. There is no general rule of thumb, however.
If the home is more than $500,000 and will be used as a second home, most insurance companies will require a security system that will notify someone if the temperature falls below a certain level. If you are renting the home or condo, be sure to tell your insurance agent. Your rates will be higher, but unless you disclose the rental situation you may not be covered if you have a claim. If you own in a condominium complex the insurance on the building is usually included in your dues. You should still carry contents and liability coverage. If you do not have a homes association, you will need your own insurance.
An Improvement Location Certificate (ILC) is usually required by lenders on residential loans. It is a map showing the boundaries of the property and the major improvements (buildings) thereon. It is not to be used for the establishment of fences, buildings, or other future improvements. Monuments or markers are not set at the lot corners.
Utilities
Water and sewer is available in all the towns and in some areas out of the towns. As you get further away from developed areas you will need to have well and septic for single family properties. Natural gas is available in most areas, but some may use propane.
High speed internet is available virtually everywhere in the county. Most often you can access with a DSL connection through Comcast or Qwest. In the more remote areas, satellite service will be the only type of internet service available.
Contract Questions
When you purchase your home, both you and the lender need a preliminary title commitment that will indicate exactly what recorded liens, encumbrances and recorded easements are currently in effect on the property. The title commitment will also indicate the vested owner of record and any restrictions on the use of the property. Title insurance is, for all practical purposes, required on all property in most states and is normally a seller's expense. However, the buyer is required to furnish the lender with a lender's policy showing the lender as lien holder on that property. These charges will be incurred at the time of settlement as a part of your closing costs. When the purchase of the property is closed, and the title company has recorded the necessary documents, the title company will then issue a title insurance policy binder to you and the lender, showing and insuring clear title to the property.
When the contract refers to due diligence it means your obligation to research the property you are purchasing. That means reviewing title documents, HOA documents, surveys, property condition, etc.
Area Questions
Not a lot! More than 75% of our county is National Forest or public land. As a result most private land is available in pretty small pieces, with a ½ acre lot being one of the larger lots in most areas. There still are a few places where you can get an acre or more, but be prepared to pay mightily for them. Seclusion doesn’t necessarily need to mean a big chunk of land, however. Consider a treed lot or a condo complex that looks out at open space or trees. When we first bought our second home in Summit County we wanted the “cabin in the woods” and we ended up with a condo in a treed area. Or, consider driving further and being in Park County, or paying more as well as driving further in northern Summit County.
See above. There is still acreage available and one or two areas that allow horses, but you pay a lot more for it. Most people only want to spend that much for a primary home, and perhaps that is what you are looking for. Again, consider property that backs to the National Forest or is close to open space. TheContinental Divide Land Trust is working hard to preserve more land as open space.
Endless! We are within 30 minutes of 5 major ski areas. There is sailing and fishing on Lake Dillon, fly fishing on the Blue River, hiking the many mountain trails and biking the more than 60 miles of paved bike trails all over the county. There are many organizations catering to special interest groups. My favorite is the Over the Hill Gang, a ski group consisting of more than 800 people over 50 years old who are on the go constantly!
Loan Questions
For a second home the rates are comparable to what you will pay for your primary residence. If you plan to use the property only as a rental the interest rate will be about ½% higher. If you use it yourself and rent occasionally you can probably get by with a second home rate, but it will depend on the lender. Many people start out thinking they will use it only as a second home, but change their minds once they close and decide to rent.
In addition to your down payment, my rule of thumb is to allow 2% of the purchase price for closing costs. In addition, the towns of Frisco and Breckenridge charge a 1% transfer fee that is traditionally (although not always) paid by the Buyer when the property changes hands. Keystone and Copper Mountain also have fees of up to 2% of the purchase price that is levied on change of ownership. Here's a more in depth breakdown of what those fees could be.
There are lending challenges in a resort market that can be different than a primary home market. While you certainly can use a lender you have used before, we strongly recommend you use a local lender for your purchase. There is nothing worse than finding out a week before closing that your lender cannot do the loan. Here are a few lenders we recommend.
An ARM is an Adjustable Rate Mortgage. It may offer you a lower payment right now that a fixed rate loan however that payment can fluctuate over the length of your loan. An ARM is just one of several options you have when setting up the loan for your new property. Read about ARMS, fixed rate, FHA loans and more.
