When deciding to embark on their journey to homeownership, many buyers overlook the option of a condo. Condos offer a somewhat different homeowner experience than owning a single family home, but can be an attractive choice for first-time home buyers. Keep reading for an overview of condos and a brief guide to buying a condo.
So what is a condo?
Condo is short for condominium – you can think of a condo as an apartment that you own, similar to how you would own a house. The term condo can refer to many types of shared living situations in which individual owners own units in a shared community property. A condo can be a unit in a closed community, a townhouse, a unit in a residential high-rise, and similar properties.
Is a condo right for me?
Living in a condo gives you the luxury of not having to deal with all the hands-on maintenance of traditional homeownership. Condos are generally managed by external management companies who take care of things like landscaping and general upkeep of the external aspect of the units (such as roofing and exterior paint) and the shared spaces. Additionally, many condos offer extra amenities, such as a gym, swimming pool, and event halls. For many people, condos offer a sense of security and community they would otherwise not have in a single family home. Finally, condos are generally cheaper to purchase and cost less in property taxes.
Of course, if you’ve envisioned your weekends as a homeowner tending to your rose garden, or if you want the privacy that a single family home offers, a condo may not be the best choice for you.
How is purchasing a condo different from purchasing a single-family home?
The first place where the two processes diverge is financing. Many traditional mortgage lenders will have restrictions on condos, require a higher down payment, or they may not offer mortgages for condos at all. Do your research and shop around for lenders who can help you with financing. Certain condos can be purchased with the help of an FHA loan, but you will need to ensure that the community you are interested in purchasing your condo in is FHA approved.
Once you have your mortgage in order you will want to find a real estate agent who specializes in condos. As you will be buying more than just a stand-alone property with a house on it, you will want an agent with specific expertise and previous experience in selling condos.
What do I need to know before closing?
As mentioned above, condos offer additional services and amenities in addition to just a living accommodation. Make sure you know what the specific community provides before signing the dotted line.
Furthermore, you will want to know what to expect in association fees, and what those fees cover. Think of association fees as a type of HOA membership, but in this case the HOA takes care of your landscaping instead of fining you for an unkempt front lawn. Association fees often cover insurance, general maintenance of the exterior of the property and common areas, snow removal in areas where necessary, garbage collection, and sewer maintenance.
In addition to the extra amenities and services covered by the association fees, you might also expect to pay what’s known as a “special assessment”. Special assessments are a larger payment paid by members of the community to cover larger projects in the community, such as roof repairs. Make sure to inquire about special assessments that are planned for the future, as they can have an impact on your association fees.
Finally, make sure you know all the community rules. Once you become a part of the community, you will be bound by these rules just as you would be bound by the rules of a homeowner’s association. Rules can include quiet hours, restrictions on pets, or even restrictions on whether you can rent the unit out. It’s generally recommended to have a lawyer review the terms of the contract before signing anything, or to consult with your real estate agent about the terms.
Should I buy a condo?
Condo living isn’t for everyone, but if the thought of a stress-free lifestyle within a community appeals to you and suits your lifestyle, you should definitely take a condo into consideration.