Is housing affordability making your entry to the market seem out of reach?
There may be other options you have not considered that will help you get your foot in the door.
Purchasing a townhouse or condo can be a great alternative if a house continues to fall outside your budget.
What you need to know:
If you buy a condo, you own the inside of the building. With a townhouse, you also own the land underneath it and perhaps some land around it. Each one will likely come with Homeowner Association (HOA) fees.
It’s not you
For reassurance, be aware that prices have risen considerable in the last 12 months, according to realtor.com. So, you’d not be alone in modifying your property ambitions.
Good news
A survey last year by realtor.com found that owning a property in a complex was cheaper than a detached home in more than 70% of cases. So, taking the condo or townhouse route should ease cash flow concerns.
Cheaper maintenance
It’s generally accepted that the upkeep of a detached house is more expensive (and definitely more work) than the maintenance fees an HOA would charge.
The HOA
You must obtain information on the homeowners association, including its rules and regulations. Make sure they’re acceptable to you and your family. Also, ask for the HOA’s financials. Note its capital reserve, which is spent on major improvements. This due diligence can be complex, so you may need to seek help from a financial adviser.
Advantages
Living in a complex has its advantages. Security is one of them, and many complexes have thriving social scenes.
Lender caution
Lenders are more cautious when they loan money against a property in a shared building or complex. It’s not unusual to pay an additional 0.75% on your mortgage. I’d try to negotiate this down or ask your broker what they can do.
Loan rules
A condo has to be in an approved project if you want to use a Federal Housing Administration (FHA) and Veteran Affairs (VA) loan.