Considering a Condo?
Homebuyers face countless choices in the search for a home that fits their budget and lifestyle. While single-family homes are most often the target, they aren’t the only option. Buyers across the generational spectrum have decided that condominiums are a solution worth exploring.
The price, access to urban amenities and limited maintenance offered by a condo can appeal to younger buyers who don’t require the space or private yard that a family typically desires. Retirees may also be drawn to how those features align with an effort to downsize, travel more, or increase proximity to health care. In either case, the community offered by a large residential building can be a social bonus. Regardless of the reasons, there are some details not to overlook.
There are a wide variety of properties that can fall under the category of condos. For someone looking to purchase a property, it typically refers to a single unit within a larger, multi-unit building. The number of condos within a building can vary dramatically with its size, and in some cases, these properties can be an age-restricted retirement community.
One critical aspect to keep in mind is that the circumstances of a specific condominium property can affect your flexibility, or even ability, to obtain a mortgage to buy one of its units. Most will be warrantable, meaning that the property meets the requirements to use a government-backed loan, but you’ll want to confirm early on. Seniors may also want to investigate the property’s eligibility for a Home Equity Conversion Mortgage, which was recently expanded to include more condos.
If the building has a history of poor financial management, a disproportionate amount of units owned by investors, or too many owners with delinquent HOA fees, it may not be deemed warrantable. Should that be the case, your financing options could be limited or come with additional costs. Be sure to discuss these issues with your lender and real estate agent early in your search.
Fees and Rules
As mentioned previously, one of the enticing features of a condo can be the reduction of personal maintenance that is required. Beyond your unit’s walls, any necessary upkeep will be handled by the condo’s board or homeowners association. However, this does come at a cost. Typically, it’s in the form of a monthly maintenance fee that often exceeds the amount of a single-family home’s HOA fee. Significant upgrades or the need for substantial repairs can result in increases in this monthly fee over time. Don’t forget to account for this when comparing the savings that a condo’s lower purchase price might offer.
Similarly, the shared responsibility for the common areas and density that comes with condo living may also mean more restrictions than you would expect in a single-family home. If you have multiple pets, run a home-based business, or plan to host large gatherings often, you’ll want to become familiar with the current rules, and the process used to create new ones.
If the lower price, smaller size and hands-off maintenance of a condo seems like a good fit for your dream of homeownership, the experts at Open Mortgage are ready to help. Visit OpenMortgage.com for more resources to inform your search or call to speak with an origination specialist today.