In today’s accelerated housing market, many consumers are opting to buy condos. There are many reasons for this—condos offer a community environment with neighbors you get to see regularly, they are often located in dense urban areas, they can have affordable price points while still offering opportunity for investment, and they tend to be less maintenance than houses.
If you’re considering buying a condo, ask yourself the following questions:
- Do you want to take the first step into owning property? Buying a condo can be a good test run to see if you are ready for the responsibilities of homeownership.
- Do you plan on staying in your condo for five or more years? Owning a condo for at least five years will enable you to benefit more from market equity gains.
- Do you want to have amenities without the upkeep and cost? If having a pool, on-site gym, and business center is on your housing wish-list, but out of your current price range, buying a condo could allow you to enjoy the lifestyle perks without having to worry as much about upkeep and cost.
- Is your family going to grow in the next five years? You don’t want to purchase a condo and immediately grow out of it. Take family planning into consideration when you’re thinking about buying a condo, as they tend to be smaller than houses.
- Are housing prices too high in the neighborhood you want to live in? The housing market has been booming since March 2020, which has caused housing prices to soar. If you are committed to living in a certain area, but are priced out of single-family housing options, buying a condo in the area could be your best bet.
In this blog post, we’ll discuss the things you should consider before purchasing a condo, and give you tips for what to expect.
What to Consider Before Buying a Condo
It's a good idea to sit down and re-evaluate your financial situation and your financial obligations at least once a year, but it's especially important to do so when you're considering purchasing a condo, house, or other residential property. If it's your first time purchasing a home or condo, this is especially an important exercise because you'll be taking on an entirely new monthly financial obligation. Even if you've been accustomed to paying a monthly rent payment, a monthly mortgage payment is often more expensive.
Take some time to sit down and include all those that will be financially affected by this purchase decision, such as a spouse or family member. If you have a financial advisor, make sure to discuss your plans to buy a condo with them before making any major decisions.
What Makes Buying a Condo Different from Buying a House?
Generally speaking, the process of purchasing a condo will look the same as the process of buying a house. You’ll need to evaluate your finances, hire a real estate agent, shop around for mortgages, and research the local real estate market. There are also some additional steps and factors you’ll need to consider when buying a condo:
1. Discuss Options with Lenders
Different financial institutions and mortgage loan services will have varying requirements for financing the purchase of a condo. You’ll want to get with multiple lenders to discuss what they will expect in terms of down payment and monthly mortgage rate. You should also be aware that it can be more difficult to secure financing for a condo than it would be for a single-family home.
2. Condominium Association Fees
One of the main benefits of living in a condo is the shared community spaces—but they also come with a fee! When you own a condo, in addition to your monthly mortgage payment, you’ll also be required to pay condominium association fees. These can vary extensively, so you’ll want to make sure you ask your management company what their fees are and when they are due.
3. Vet Your Condo Management Company
When it comes to enjoying your condo-living experience, management matters. You’ll want to work with a reputable, well-managed complex with strong financial health. When you’re looking at properties, make a point to meet with the community manager or member of the condominium association to make sure you get along. Read reviews of other property owners’ experiences with the management company, and take a look at the property regulations to get a feel for how the property is managed.
4. Contract Contingencies
Your purchase contract for a condo should have some additional contingencies, including laws and restrictions relating to your ability to review the condominium’s budgets and balance sheets. If their financial situation does not seem to be in order, this can provide a way to back out of the purchase agreement.
Navigating the process of buying a condo or home can be daunting, but we hope this guide helps you along the way!
Always consult a real estate agent for real estate advice.
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