To buy a condo or a single-family home
Many first time home buyers wrestle with the decision on whether to buy a single-family home or a condominium.
The “Bankrate” website took a close look at many of the deciding factors that go into which type of property will fit your lifestyle the best.
Bankrate says there are five factors to consider when shopping for a home:
• Location and lifestyle.
• Maintenance costs.
• Rules of ownership.
• Lending and price.
• Monthly fees.
Many first-time home buyers are young professionals who are more in touch with the social benefits of an urban life - walking distance to shops, restaurants and transportation. These may be more important to them than having a larger home and backyard space.
Another reason to look at condo living is that owners have less direct responsibility for many maintenance issues that are covered by the association fees.
Time demands to maintain a condominium are also less than a house. “Those with many other responsibilities may not have time for home maintenance,” says Jordan Clarke, a real estate agent in Carlsbad, California. “Condos are also a convenient option for people who travel a lot.”
“Clarke says a condo or townhouse may be a good fit for first-time homebuyers because association fees cover maintenance and repairs. Owners of single-family homes have to set aside money for those purposes,” said Bankrate.
There are some downsides of condo living, depending on personal preferences.
Condominium-style living necessitates that there are several dwellings in a concentrated area and the common areas, not included in the condo purchase, are governed by an association.
According to Bankrate:
“• Owners associations can tell residents where to park, ban them from barbecuing on balconies, and otherwise impose restrictions.
• Neighbors are close, and they can be annoying.
• “You are significantly more tied in value to your neighbors when it comes to condos and townhomes,” Clarke says.
“He explains that exterior renovations (and their budgets) have to be approved by the owners. And when other owners don’t pay their bills, you can be required to fork over more than your fair share and hope you’ll be reimbursed later,” according to Bankrate.
There are also a couple of factors a purchaser will encounter when considering a condo - less space and higher mortgage interest.
Bankrate went to Jeremy David Schachter, mortgage adviser for Pinnacle Capital Mortgage Corp. in Phoenix, who said that lenders scrutinize the financial health of the owners association.
One of the stumbling blocks of condo ownership can be the monthly association fees. These fees are not tax deductible like mortgage interest. The buyer may decide to forego the condo in favor of adding that monthly assessment into a larger monthly mortgage payment for a home.
For condo owners, there is also the possibility of a special assessment for major repairs above those items covered by the monthly fee. Single-family homeowners may also experience the same major repairs and are solely responsible for the cost of the repair.
For those purchasing a vacation property, many select condos. Condos can be rented easily because the owners do not have to do the regular maintenance. The rent can potentially pay the mortgage but may result in higher interest rates, according to Bankrate.
As always, be sure to ask your Realtor if you have any concerns or questions about the properties you are viewing. Specific areas will impact what the differences between single-family homes and condominiums are.
To see more details from Bankrate, visit their website for this and other related articles to home buying.