Should I Consider a Condo if I Can't Afford a Single-Family Home?
A recent increase in mortgage interest rates paired with a continuing rise in home prices has bumped some home buyers out of purchasing certain types of properties. Because of this many homeowners across the country have begun to change their home search parameters to include different types of homes that may be more affordable to them.
Some home buyers that have found themselves able to afford less of a home have considered switching their home search from single-family properties to condos. Numbers from last year showed that condo properties on average were more affordable than single-family properties in 72.5% of locations around the country.
Is buying a condo a good switch to make?
How the purchase process differs in a condo as compared to a single-family home
Though purchasing a condo is purchasing your own real estate property that you own there are a few differences in the purchase process. A condo home cannot be purchased through a government-backed loan like an FHA or a Veterans Affairs loan without extra steps. There is a small exception to purchasing a condo with an FHA or VA loan and that is that the condo must be an approved project on the FHA's list, or approved through the VA before purchase.
Mortgage loans for condos actually typically have higher interest rates than single-family homes as well. This is because mortgage lenders see a condo purchase as a riskier investment than a single-family home purchase. However, the cost of a condo home is much lower than a single-family home and often means a lower monthly payment overall.
Make sure to consider the community living aspect
One of the largest and most notable differences between condos to single-family homes is community-style living. Though there are plenty of single-family neighborhoods where you will see your neighbors daily as homes are close enough together, living in a condo means living in much closer proximity to your neighbor
This means that the things you do on a daily basis will be more noticeable and the things your neighbors do will be more noticeable to you. This includes both lifestyle and home maintenance habits.
But there are some ways in which living in closer proximity to others can be beneficial. It can help you to get to know your neighbors more easily when you see them more frequently. There are also many more opportunities for community activities put on by the condo association within a condo community.
Remember to figure in the extra costs
It can be easy to fall in love with the factors of not having to take care of exterior maintenance on a condo property as well as being able to utilize community amenities that you probably wouldn't have or be able to afford with a single-family property. But with these come condo association dues.
When deciding if a particular condo property is truly within your budget you need to consider not only what your monthly mortgage payment would be but also how much the condo association fee is going to add to that monthly payment. In some condo communities, this can be as little as $50 a month and in others, it can be into the thousands.
Many times condo associations with more amenities and a larger number of offered group activities come with a higher condo association dues price tag. It may be promising to see a lower monthly mortgage cost but when you add the monthly association dues it may end up being the same price as a single-family property.
Expanding your home search can be a good and beneficial way of finding a home that is affordable for you when navigating the market changes of increased mortgage interest rates and increased home prices. But in some cases, it may be more beneficial to find a way to budget for the property you originally intended and hoped to purchase when you started searching for homes.
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