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My best advice to you when you decide to buy a
property is to first go to a mortgage bank and ask what your rights
are (for citizens who never owned an apt before or new immigrants) and
how much mortgage you are eligible for. You must prove ability to
repay a mortgage in order to be eligible to get one. Bring to the bank
proof of income (3 months of pay slips), 3 months of bank statements
and any other proof of assets and income. The bank tells you, on this
basis, how much mortgage they will give you.
At the same time ask the bank what interest rate they will take on
your mortgage, and tell them you will take out the mortgage where the
interest rate is lowest. Get their quote in writing with assurance as
to how long this quote will be in effect. Go to several banks and play
one against the other in order to get the best interest rate. Ask the
bank to reduce or eliminate their charge for opening up the mortgage
file. The bank will not want to lose you to another bank. Your real
estate agent or lawyer could also ask for you as they should have
excellent contacts within the banks and normally can arrange for you
not to have to pay this fee. Our agency has such a deal with three
banks.
When you decide in which bank you are going to take out the mortgage,
then get 3 guarantors under the age of 55 to guarantee your mortgage.
If you do not have guarantors then you have to pay higher interest.
While you are in the bank, make sure you sign up for zaka'ut, your
mortgage rights documents. You will need your teudat oleh for this,
proving that you have rights as a new immigrant. You want this to be
ready so that when you buy your home you will not have your mortgage
held up.
Another piece of advice which will save thousands of shekels over the
lifetime of the mortgage is to not accept the bank's insurance
policies unless you are over 45-50. This insurance covers life (to pay
off the mortgage in the event of death of one of the mortgagees) and
property insurance (to repair the property and maintain property
value). It is much cheaper to take out these policies from a private
agent. Both the premiums and the deductible will be much lower. Simply
inform the bank that they should not include the policies in your
payment schedule and provide proof of your private policies.
Check with your immigration organization (SAZF, Telfed, AACI) to see
if they have mortgages they can give you. Sometimes specific cities
have mortgages they give to olim from their cities through immigrant
societies. Gemachim – free loan societies – sometimes can help you
overcome minor financial binds in your purchase. Just remember – take
out only what you know you can pay back!!
It goes without saying that you must confirm your private sources of
financing. If you are taking family loans, make sure in advance that
those promised loans are still available when you begin your search
for a home. It happens all the time that people come in to purchase an
apartment and after we find one they say they can afford, they learn
that their family is not going to lend them the amount they told them
previously that they would give.
Once you know exactly what are your finances from private sources and
what the bank will allow you as mortgage, based on your income, then
begin your search for a home which will cost within the amount you
have at your disposal. If you can only afford an apartment in an area
in which you are not willing to live, buy it anyway, rent it out and
wait for it to increase in value, rather than lose your rights. Use
the rent money you receive to make mortgage payments or help with the
rent of a home where you DO want to live. Meanwhile, you are building
equity in the apartment you could afford. Eventually, when you are
more established and prices go up in the area where you bought, you
can sell the apartment and buy something where you want to live. I
know many people who have done this.
You can only take out a mortgage on a home AFTER the seller gets rid
of his own mortgage. When the property is free of liens and mortgages,
then you can get a mortgage of your own. The lawyers usually use your
first payments to pay off the mortgage of the seller. The bank will
ask that you use a certain amount of your own money to pay for the new
apt BEFORE they will issue the mortgage. (If they did not do this,
then it would pay for people to just walk off from a property and not
pay their debts.)
It is extremely important NOT to overpay for your home. The bank sends
a surveyor to evaluate the apartment you are purchasing and, if the
price is too high, the bank will give you a mortgage only for the
amount that the essayer says it is worth. In other words, if the bank
says the house is worth only $190,000 and you are paying $200,000 for
the property, then you will have to come up with an extra $10,000 of
your OWN money to pay for the house.
The bank will evaluate only the legally built parts of the property,
so that if the house is registered as 4 rooms, and there are 6 rooms
in actuality, two of which were built without proper licensing, then
you will NOT get a mortgage on the two extra rooms. In order to get a
mortgage to cover those two extra rooms, the seller will have to take
out a license retroactively and pay "hetel hashbacha," an
improvement tax to the municipality. Only then will the rooms be
legalized and only then will the bank consider giving you a mortgage
to cover the cost of those two rooms. There have been deals lost
because the owner does not want to pay the tax, which can be very
high, or he raises the price retroactively of the apartment in order
to have the money to pay the tax. |
