Condos are individually owned units within a communal living complex. They often look just like apartment buildings. Unlike apartments, however, you own your private condo unit. All the common areas, like tennis courts, lounges or pools, are collectively owned by all the complex’s residents. Condos have their own homeowner’s associations (HOA). The HOA puts rules in place to maintain the upkeep of both the building and neighbor relationships. Each complex will have their own rules and restrictions. You should be aware of those before you buy a condo and find you can’t live with their rules.
There are pros and cons to owning a condo.
Pros
- Amenities
- Upkeep for the exterior of the building is not your responsibility
- Close neighbors
- Condos may be less expensive than purchasing a home
There’s definitely an appeal to buying a condo that comes with amenities like a swimming pool or tennis courts. You won’t have to manage the upkeep of those amenities yourself, nor care for the lawn or garden. Condos also come with a great built-in opportunity for a resident’s social life. Neighbors are closer, and with access to the same building features, you can easily make friends.
Cons:
- Association fees
- Slower appreciation
- Association rules
Condos also have their drawbacks. For one, if you’re not a more social person, you may not like having to share communal spaces or even walls with your neighbors. The fees that come with owning a condo may put a damper on things, as well. If an association doesn’t have enough reserve funds, you and other residents could get stuck with a big bill to cover repairs.
You’ll want to make sure the association has their business in order, and that their rules align with your expectations of a living space. Many complexes can have rules like quiet hours after 10 p.m. or no pets. Others will dictate the length of your grass and whether you’re allowed lawn ornaments. Same goes for how many cars are parked in your driveway. Condo associations can have all sorts of nitpicky rules; it’s up to you whether the choice makes sense for your lifestyle.
Financing a condo
You can use the same loan programs for condos that you would use to buy a single-family house. There are some key differences in how lenders look at the two types of properties. In addition to vetting your finances, mortgage lenders evaluate the financial health of the condo association as well. When you’re looking for condos, use the condominium search tool offered by the U.S. Department of Housing and Urban and your lender to make sure the condo you are considering qualifies for your approved type of mortgage loan. Mortgages for a condo tend to have higher interest rates than single-family homes do — that’s because lenders view them as a riskier bet. There’s more hanging in the balance than just your ability to repay the loan; the condo owner’s association must also be in sound financial health.
Condos aren’t for everyone. Consider whether condo life is right for you before making the decision to buy one.
Questions to ask:
§ How much are the dues?
§ When were the last special assessments levied?
§ Who’s responsible for what maintenance?
§ Can I rent out my condo?
If you are considering purchasing a condo and need the help of a licensed real estate agent, please feel free to give us a call.
References:
Dunn, A. (December 18, 2020). What to Know About Buying a Condo in 2021. Lending Tree. Retrieved from: https://www.lendingtree.com/home/mortgage/getting-a-mortgage-for-a-condo/#whatisacondo
Smith, L. (August 20, 2018). What to Know about Buying a Condo. Smartasset. Retrieved from: https://smartasset.com/mortgage/what-to-know-about-buying-a-condo