We bought a penthouse!

Some of you may recall posts fro several months ago in which we were looking for a house--wanting to own again now that we have permanent residency and are pretty confident that we will not have to move away (I have actually lived at my current address longer than I lived at any other in my lifetime).

We started off thinking we would buy a single family, detached home. Something small, two or three bedrooms, all on one level.  It didn't take long to realize this is an almost impossible find in our highly desirable area.  
I don't have a car now and do not want to add the hassle and expense of one to the budget when we move--so that limited us to living in larger towns along the main "Bergstrasse" area and not little residential areas out in the Odenwald Forrest--where property prices are lower but the only public transit provided is a bus running out to other towns about once an hour or less.
In the main towns, there are very, very few detached family homes on the market-even lots for sale meant to build "single family homes" on are often such that you are required to build one wall attached to the adjacent home.  Those zoned in such a way that a truly detached home could be built were all more costly than our budget allowed.
The only already build detached single family homes on the market were either very costly (and also generally very large) or in need of extensive renovations like new roofs, heating systems, pipes, electrical, etc (which, really makes them costly as well by the time necessary upgrades are managed).

We had not even considered condos initially, but it eventually occurred to us that, especially if we would be sharing walls no matter what, a condo offers much of what we really want: low maintenance and less for me to clean since Dave travels so much and lawn care, etc all falls to me most of the time, and we hope I can travel with him more often than not once Rio is out of school.  We don't like having a lot of "stuff" and often find that we are quite happy in a small places that are laid out well, even really living in just a small part of where we rent now.  We DO like to spend time out doors though, dining, just sitting and chatting over drinks, etc.  So, the small balconies that most condos have felt a bit limiting. We eventually focused on penthouses with large terraces and small interior spaces.

By the time we knew we wanted a penthouse, we had also looked enough to have narrowed the field of locations to just three towns that I liked best.  We learned quickly that the better penthouses, with good floor plan layouts, sell long before construction is done and the best way to go is to buy early and patiently wait.

So, when a small parcel of farmland was rezoned for a new neighborhood in one of the towns, we started haunting it, driving through weekly, looking for builder signs and when we found that one lot is indeed going to be a condos with three penthouse units, we jumped at the chance.  Here is what it looked like when we first saw the lot:

And a few weeks later, after we had decided to buy:

Over the course of a few weeks, we ironed out details of some minor changes to the layout and secured financing.

Financing a home in Germany, for us Americans, was an education in and of itself.  In the US, the most common home loans are for 30 years (either at a fixed rate, or an adjustable one which starts low for a few years but then inflates higher, or to whatever the going rate is when the time arrives--these are best for people likely to sell by the time the adjustable rate goes up, or those planning on refinancing down the road).  In either case, the loan is designed so that after 30 years of payments, the home is fully paid off. For the first several years, unless you choose to pay extra towards the principal, nearly all of your payments will be interest and very, very little goes towards the principal of the loan (unless you choose to prepay above the amount due and have that go towards the principal, which most US loans allow, in any increment, at any time, so that simply rounding up the monthly payment to the next $100 every month can cut a few years off of the total duration of the  mortgage).

In Germany, we learned that most home loans are for 10 or 15 years.  The entire home will not be paid for when the loan is up--there is a lump sum payment due at that time (you can then either pay it off in cash, or get a new loan to cover the new, smaller amount).  Typically (nearly every option we looked at) about fifty percent of your mortgage payment from day one will go towards the principal on the loan, which means you build equity much faster.  You can prepay (in most loans) but are generally limited to no more than 5% of the total loan amount per year and it must be done in one lump some no more than once per year or in lumps of 1000€ or more but can be done more often depending on the bank and specific loan terms--in either case, simply rounding up payments does not appear to be possible under normal circumstances.  

We signed the paperwork for our loan just before we left for our summer trip to the US back in July (actually, 3 loans through one bank: one government sponsored very low interest loan because the house is very energy efficient, the majority of the rest as a 10 year loan at a lower rate and a bit as a 15 year loan at a slightly higher rate--this spreads out the lump sum pay offs at the end nicely, and the overall rate with the three combined is 2.01%, which is much better than I ever thought I'd see when we lived in the US) and on Friday, we went in for the German version of what we call a closing in the US.

In the US, closing generally involves lots of people around a table and signing your name, or initialing things dozens of times.  I always try to read at least the typed in information which is clearly specific to us, like names, addresses and finance rates, but slowing down to try to actually read and understand all of the legalize involved has always been met with impatience and annoyance from everyone else--and before long you are just signing and initialing with only vague understandings of what various forms mean, as explained quickly by the lawyers or bankers working the closing.  I have never really liked the rushed feeling at all.

Our meeting with the German Notar was quite different.  First of all, we were mailed copies of everything we would sign weeks in advance.  There were a few blanks in there which would be filled in in the final papers we signed, but it was 98% there and available to review before we ever went to officially sign.  Then with us and the builder's representative in the room, the Notar actually read aloud the entire 31 pages of legalese to both parties before we signed it!  From an American standpoint this is kind of an unbelievable concept--but really it is kind of smart, no one could realistically argue that they did not know what was in the documents after that!  He read fast, and there were a lot of very long German words in there, so my brain felt like it mush after two hours, but the Notar did stop after each section to confirm no one had any questions (and explain anything we were unclear on if asked) and that all information was correct.  

Just look at the top bolded word in that snippet below!  That is one looooong word, and there were plenty of others like it thought-ought.  

After 2 hours of ultra fast reading of super long words, we each signed ONCE and that was that.  we'll get something in the mail in a few weeks, and again in 18 months or so once the condo is fully built and the builder's construction loan paid off at which time the Notar will do what is necessary to have us shown as owners in the "Grundbuch" (property book, THE source for all property ownership information in Germany, where US (and British, I believe) style titles and title searches simply do not exist).  

And the best news?  The foundation of the building was dug last week, so we not only got the legal things done, but it is being built now and that just feels good. It is amazing how exciting a hole in the ground can be:

The foundation of the duplex next door was also dug out last week.  I am amazed at how close together they can dig and work and not have issues (ours in on the left, their's on the right, there is about a half foot of soil in between up top and 3 - 6 feet at the base, perhaps):

And as a final bonus, we have discovered a lovely little lake, complete with public swim beach, a walking path all the way around and a few Beer Gardens along the shore--just a 5 minute bike ride away from our new home:

What more could a girl ask for?

--Hadley