Sucker punched

1) I didn’t do my research. “What’s that building next door that looks like a hospital?” I asked the buyer’s agent showing the condo I was about to buy. “Oh, that’s a nursing home,” she said. Stupidly, I took her word for it. After I moved in, I realized this “nursing home” also houses the mentally ill, who smoke outside the building, often yelling invectives at passersby. I have names for these colorful characters: “Pants Around the Ankles Guy” is self-explanatory, as is “Shouty”; “Lennie” is what I call the sweet Of Mice and Men –like guy who possesses Hulk-like strength, as I discovered when I caught him trying to break into my building by pushing in a window.

2) I got a 5/1 ARM loan. This loan offers a low fixed interest rate for the first five years, then moves to an ARM (adjustable rate mortgage) after that. When I bought my condo in 2005, it seemed plausible that I’d sell it three years later—thereby avoiding the ARM—and make a handsome profit. I mean, home prices would keep skyrocketing, right? Needless to say, I’m still there, have no plans to sell in this market and am facing the prospect of my interest rate going up exponentially in two years unless I refinance.

3) I made a 5 percent down payment. If you pay less than 20 percent of your purchase price as a down payment, you get saddled with the dreaded PMI (private mortgage insurance), a flat fee (mine’s about $140) you pay monthly along with your mortgage payment. You continue to pay PMI until you’ve paid off 20 percent of the purchase price, but even then you have to jump through some major hoops before your mortgage company quits charging you for it.

4) I didn’t negotiate. I offered a slightly low-balled price for the condo, and the seller refused to budge. At all. Not even $1. That should have been a bad sign, but by then I just really wanted that condo, so I paid exactly what she asked. Three years later, home prices have fallen and my condo is worth thousands less than what I paid.

5) I spent the money I got back at closing. My Realtor advised me to take out a loan that was $4,000 over the asking price so I could get that money back to cover my closing costs. He overestimated how much the closing fees would be, so I ended up with a nice sum after everyone signed the papers. So…I spent it on new furniture—when I should have saved it for property taxes. When tax time came around, I had a shortfall in my escrow account, causing my monthly mortgage payment to go up by about $300 for two and a half years to pay off the deficiency. The furniture rocks, though.