Condos, Townhouses and New Construction: What to Know Before You Buy
Deciding to buy a house is only the first step of the homebuying journey. Choosing what type of house to buy is another thing altogether. Condominiums (condos), townhouses and new construction homes all have their perks, but they also have their drawbacks. Here’s what to know to decide which is the best option for you.
The truth about buying a condo
Condos are private residences that are typically housed within a larger building with a shared entrance. If you are considering buying one, these facts can come in handy.
Buying a condo may be easier on the budget. One of the biggest draws of buying a condo is they are typically priced lower than single family homes. If you’re in an area where home prices are very high, expanding your search to include condos may give you more options that fall under your price range.
If you buy a condo you may enjoy lower costs on other things as well. For example, insurance is often less expensive for condos than for single family homes because the condo association has a master policy that covers part of the building’s structure. Also, you don’t have to worry about paying someone to cut the grass because with a condo, you don’t own the land.
You may have to pay association fees. While a condo may be more affordable than a single family home, that doesn’t mean you won’t have your share of expenses to pay. Most condo communities charge monthly association fees, which are designed to help pay for shared costs such as security and property maintenance. Before agreeing to buy a condo, make sure you factor the cost of association fees into your budget to see if the purchase still makes sense.
Condos may have strict association rules. Since condos are a shared living environment, there are typically rules that residents must comply with to increase the odds that everyone remains happy. For example, a condo association may require residents to turn their music down after a certain time each night. If you don’t like the idea of being regulated in your own home, a condo unit may not be the best option for you.
The mortgage process can be complicated. When you seek financing for a condo, the lender may factor in not just your finances, but also the financial health of the condo association. The lender may consider, for example, the number of units that are occupied and whether current unit owners are delinquent on their dues. However, there are first-time homebuyer programs and other sources of financing help that you might be able to qualify for.
The truth about buying a townhouse
Townhouses are homes that share one or more walls with other residences but have their own separate entrances. If you think a townhouse is right for you, here’s what you should keep in mind.
Townhouses are typically more affordable. When compared to single family houses in the same location, townhouses typically cost less. That means you may have more money in the budget for savings, investments and other things.
You have more control over your environment. While you don’t have ownership over the exterior parts of a condo, you own the inside and the outside of your property if you buy a townhouse. That means as a townhouse owner, you’ll likely be responsible for the maintenance of the property. Your homeowner’s association (HOA) may have requirements for the outside of your home to be kept up to certain standards, but you’ll likely be able to do anything you want to do inside.
You may be charged HOA fees. Townhouse communities typically come with fees that are designed to pool residents’ money together to pay for such costs as snow removal, landscaping of common areas and sidewalk replacement. Before agreeing to purchase a townhouse make sure the HOA fees fit into your monthly budget.
Financing tends to be straightforward. Getting a mortgage for a townhouse may be easier in some cases than getting one for a condo because the lender is only considering your financial picture and not that of the condo community. There are also first-time homebuyer programs and other sources of financing help that you might be able to qualify for.
The truth about buying new construction
New-construction homes are houses that have been newly-built, making you the first owner. If moving into a brand-new house appeals to you, here are some things to consider.
You will likely pay more. There’s something nice about being the first one to use the appliances and walk across the floors. When you buy a new home that has just been built, everything is brand new and it’s less likely that you’ll have to deal with repairs right away. However, that comes at a cost. When you buy a new-construction home, you will typically pay more than you would for a similar house that is a resale. You’ll also likely pay more than you would for townhomes and condos in that area.
You may have to wait longer to move in. When you’re having a home built, there may be delays in the construction that keep you from closing on the loan — and moving in. That means it may make sense to ask for a longer period of time to lock in an interest rate, particularly in a rising interest rate environment.
Financing can be straightforward As with a townhouse, getting a mortgage for a newly-constructed house may be easier in some cases than getting one for a condo because the lender is only considering your financial picture and not that of the condo community. There are also first-time homebuyer programs and other sources of financing help that you might be able to qualify for.
Whether you buy a condo, a townhouse or a new construction home, you’ll enjoy many benefits of homeownership. However, by taking the time to explore the pros and cons of each option, you’ll be able to determine which one offers the most advantages to you