Should You Buy Where There's a HOA?
Many home buyers don't fully realize the trade-off they're making when they move into communities that involve becoming association members. More than 57 million people belong to associations governing everything from large and small condominium developments to subdivisions of single-family homes, according to the Community Associations Institute, a trade group in Alexandria, VA.
They are trading the convenience of having someone else maintain their property (in the case of condo associations) in exchange for being subject to the decisions made by others, often times including what they can do in their own unit, expenditures for maintenance of the property and the assessments they will have to pay.
Two common homeowner complaints: unexpected increases in dues and unwelcome rule changes. And in some states, associations are within their rights to foreclose on homeowners who refuse to pay their dues.
Despite the difficulties, associations offer plenty of benefits, including supporting property values by keeping common areas well-maintained. It's really impossible, especially in today's market, to sell a home where your next-door neighbor has a yard that's gone, or junk cars parked outside.
Another plus: Homeowners who, alone, can't afford a swimming pool, fitness room, or access to a golf course can enjoy such amenities through the resources of the association.
Before You Buy
Do your homework before signing with an association.
Explore the building or neighborhood and talk to the community manager to assess whether the rules will adversely affect your lifestyle.
Potential conflicts include restrictions on:
- The size, type and number of pets.
- Exterior antennae, clotheslines, flags, fence types and paint color.
- Running a home-based business, including restrictions on parking commercial vehicles.
Next, read the association documents, or covenants.
Ask what the monthly dues cover, whether the association hiked dues substantially in the past and, if so, why? Ask about additional fees, such as move-in fees.
Ask about the size of the reserve fund. Some states, including California and Florida, require associations to follow a reserve-fund formula, but in other states there is no good rule of thumb for how much is enough.
At the very least, be sure there is an amount large enough to cover future large maintenance costs, and consider talking to a real-estate attorney if you're unsure. Ask when the association last commissioned a reserve study. These studies ensure the association is putting aside enough money to cover major upcoming expenses.
Ask for minutes from recent meetings of the association's board of directors, and a copy of the association's recent financial statement. If they don't have one, that's a red flag immediately.
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Exactly What Does the New CC Legislation Mean?
President Obama has signed the Credit Cardholder's Bill of Rights, a set of rules that will change the credit card industry.
News story after news story has been telling everyone how "this sweeping legislation would reform and revolutionize the credit card industry…"
So what's the hold up? What is taking so long to implement these new regulations into policy? After all, the new rules don't go into effect for months!
What does this proposed regulation really mean to us as consumers? Here are the major components of the new law:
Existing Balances
Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent. If a customer is delinquent and the rate is raised, the rate must be lowered again if the cardholder pays the minimum balance on time for six months.
In response to this provision, look for credit card issuers to increase rates for customers who carry balances right away, so pay the balances off ASAP if you can. Otherwise, be sure to make payments on time.
Teaser Rates
Issuers cannot raise interest rates for the first year after an account is opened and promotional rates must last at least six months.
Some limits on teaser rates are great, but the burden is still on you to be aware of when your low rate expires!
Payments
A consumer payment above the minimum applies first to the balance with the highest interest rate.
This is a no-brainer that should have been this way all along. This change alone will save consumers big bucks in interest!
Over credit limit fees:
Issuers cannot charge "over-limit" fees on credit cards unless the consumer has signed up to allow such transactions.
Save your money. If possible, use only 20% or less of your total available credit limit across all of your credit cards combined. Your credit rating will thank you.
Bills
Issuers must send a bill 21 days before the due date.
Minors
For consumers under 21 years of age, a credit card issuer must get the signature of a parent or another party to take responsibility for the debt, or it must obtain proof that the under-21 consumer can repay credit.
Hopefully this new rule will go a long way toward stemming the growing tide of college students who are in debt over their heads. It is strongly suggested that you help your college student get an "emergency only" credit card with a set credit limit.
Fees
Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service.
Disclosure
Cardholders must get 45 days notice of change in terms.
It's always been critical to read both the small print in your current agreement (or new ones sent later on) and all inserts in your credit card bills. With this new rule, you won't have the credit card company to blame if you miss an important change to your card rules.
Gift Cards
All gift cards must have at least a five-year life.
The new law tackles some of the sneaky gift card tricks being used now. It eliminates the practice of declining values on gift cards and hidden fees that punish cardholders for not cashing cards within a certain amount of time.
The gift card industry racks up billions of dollars for retailers and issuers every year. And millions of dollars worth of gift cards go unused each year.
Lenders Not Happy
As you can imagine, the credit card industry is NOT happy about these changes. They claim these rules will make it harder for consumers to get credit, that cardholders who pay their balance in full will see higher fees, and that rewards programs may be canceled.
Take a hard look at any rewards program in which you participate to calculate if it makes sense to cash in the points now in case the purchasing power declines or the program is canceled or changed.
Bottom line: This new regulation is a step in the right direction and will end many abusive practices.
Be a vigilant consumer. You are ultimately the one responsible to ensure that your credit card issuer is complying in every way with the new legislation.
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Home Sales Rise – Prices Fall 17%
Existing home sales rose in May, as increasingly affordable home prices and a first-time tax credit seem to attract hesitant buyers.
The National Association of Realtors reported that existing home sales ticked up 2.4% last month to a seasonally adjusted annual rate of 4.77 million units compared to the downwardly-revised rate of 4.66 million in April.
The median price of homes sold in May was just $173,000, a 16.8% year-over-year drop.
The slight sales increase helped reduced some of the supply of homes on the market. Total housing inventory fell 3.5% to 3.8 million existing homes for sale. That's a 9.6-month supply, down from a 10.1-month supply in April.
Appraisals: According to Lawrence Yun, chief economist for NAR, The sales increase "is less than expected because poor appraisals are stalling transactions." Yun added, "Some contracts are falling through from faulty valuations that keep buyers from getting a loan."
A report earlier this month showed the number of home sale contracts signed in April far exceeded forecasts. Pending home sales are a forward-looking indicator since many of the contracts take weeks or months to become completed deals.
Outlook: Home prices may now be affordable enough to draw in more buyers, but "the real test for this theory will come next month," said Bob Walters, chief economist at Quicken Loans. "If the numbers remain strong, perhaps it is time to begin pondering if we have started to form a bottom in the housing market."
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