Pros and Cons of Buying a Condo
- Oct. 1, 2018
- Rebecca Singer
- Real Estate Tips
Is Buying a Condo a Good Idea?
So what's the skinny on buying a condo? Are there any different procedures, any extra considerations to make? Definitely! There are many reasons, and pros and cons to buying a condo. If you, or someone you know, is looking to make a condo their new home, read on to find out all that comes along with it.
Why Buy a Condo?
There are many reasons someone might buy a condo over the typical single-family residence. To explain the difference, a private residence is privately owned, whereas with a condo, or condominium, common areas are jointly owned by the other condominium residents.
In markets that are more expensive, such as downtown areas, condos tend to be a popular choice, as they are often cheaper than buying a single-family residence. In this way, condos offer many buyers an opportunity to enter and live in a location they might not otherwise be able to afford. It's a viable alternative to renting an apartment, especially considering that as a condo owner, you can build equity and often take advantage of tax deductions on the mortgage interest.
Condos tend to be popular for first time homebuyers for their affordability, and among the retired, as a condo community will often provide services specifically catered to them.
Because condos share a common area that is owned by all residents in the building, there is a governing board that oversees how the condominium community operates. These associations manage the complex and handle any rules or guidelines for the community.
Pros of Buying a Condo
Condos tend to be less expensive than their single-family residence counterparts, and they can provide homeownership opportunities for more buyers.
Many condos are built in popular, high-demand areas and downtowns, so if you want to be in the heart of a city, or within walking distance to many different amenities, a condo might be a good option.
Many condos will offer security features such as a buzzer or guard service. Living amongst a group of neighbors also provides a sense of security when you leave for vacation.
If you're not the kind to work out in the yard, or handy with maintenance, welcome to the wonderful world of condos where you don't really have to worry about these chores. Many condo complexes hire professional landscapers to maintain the exterior, and if something on the interior breaks they will have someone come fix it. Be careful here though, if you break it yourself through negligence, they may require you to cover the damages.
So, since you are the co-owner of all those lovely common areas, what's actually in them? Often they will include tennis courts, swimming pools, a gym and other amenities you might not be able to afford on your own.
Possible Cons of Buying a Condo
No Land Ownership
Unfortunately when you buy a condo, you don't own the land beneath it, but share an interest in it with the other condominium residents.
It costs money to upkeep those lovely common areas, so as a condominium resident you will be required to pay a monthly fee that goes towards the maintenance and repair of the common areas. So if there's a swimming pool, be sure to hop in every once in a while! There may also be an additional fee tacked on for any larger repairs and renovations.
Since you'll be living in a community, with a community board or association that helps to govern it, you may have rules about pets or using shared facilities.
Compared to getting a loan for a single-family residence, a condo loan may have a few additional considerations, which vary depending on whether you get FHA or Conventional financing, and then vary from lender to lender. If you’re thinking about getting an FHA loan for your condo, it must be listed on HUD's FHA approved condominium list. The FHA has a list of criteria that a condominium project must meet before it can be approved to allow residents to use FHA financing to purchase or refinance a condo. When it comes to conventional loans it will vary from lender to lender as it will depend on their investor guidelines.
Be sure to work with a lender who has a dedicated team for condo approvals, like New American Funding, who will make the process is easy - so you can enjoy shopping for your home! Use our Home Affordability Calculator to find out how much you can afford!