Is buying a condo right for you?
Condominiums, or condos, can be great alternatives to detached homes. City dwellers, singles, couples, seniors, and many others may look at the condos that suit their needs and budgets. Others may simply prefer low-maintenance living. Buyers who feel “priced out” of homes may discover condos offer an affordable home ownership alternative.
For some buyers, a condo is a place to live for a few years. For others, a condo can be home sweet home for a lifetime.
This guide is designed to help you learn terms, questions, and obligations you should understand before you decide to buy a condo.
How do you become a well-informed condo buyer? Take the time to read and learn… you may find a bright and exciting future of condo ownership ahead of you!
Although getting a mortgage loan to purchase a condo is similar to purchasing a detached home, there are some important differences.
You may have a basic understanding of what a condo is: you own your “unit” within a larger building or community of other condo owners. You jointly own the exterior property and common areas with all unit owners in the building or community. Condo owners pay a monthly “condo fee” that covers general repairs and maintenance to the building exteriors and common areas and builds up a cash reserve for future needs.
There are many styles of condos, from high-rise apartments reached through common interior hallways or garden-style apartments with outside entrances to multi-story townhouses. Each condo is different, but generally the maintenance of exterior and common areas is taken care of through your condo fee, so you don’t have to worry about replacing a roof, for example.
But there’s more to know. And one important thing is that condo ownership is home ownership.
You may find that homeownership provides you with tax and investment advantages. For example, you may be able to deduct your mortgage interest if you itemize deductions on your tax return, and you may discover that, like detached homes, condos may appreciate in value over time. Please consult your tax advisor about your individual situation.
Your lender will look at many of the same kinds of borrower qualifications for loans secured by condos as it does for loans secured by detached homes. It is critical for your lender to know that you can repay the loan without undue hardship to you or risk of default on your mortgage.
But with condos there are a few more things to know. To make sure your condo quali es for the most favorable loan nancing, Your lender may evaluate several factors designed to assess the financial and governance strength of the condo community or building you are considering.
You’ll want to evaluate the condo carefully before finalizing your purchase o er. You’ll want to know:
Remember, you’re not just buying a home; you’re buying into a community. Take the time to look around, to learn, and to ask the right questions.
Questions to ask your real estate professional, lender, and condo association
To help you learn more about purchasing a condo, here are some questions you may want to ask or research.
Remember, this is only a partial list meant to help you get started. If you have questions, ask your lender, your real estate professional, a real estate attorney, or the officers of the condo’s HOA. You may also find it helpful to do some online research.
In most cases you have a limited period to review the condo documents after your purchase contract is accepted by the seller. Talk to your real estate professional, know your rights—and, if necessary, consult a real estate attorney.
First, make sure you’ve covered the standard home-buying basics. When you’re ready to purchase a condo, your lender can help you with the process and help you select the mortgage financing option that is best for you.
If you have credit or other issues that need to be addressed before you can buy, ask your lender to refer you to a HUD- approved housing counselor.
Be proactive. Prepare your own checklist about the home style, services, and amenities that are important to you, and then visit a variety of condos to find one that ts your lifestyle.
When you’re ready, your lender can help you with the process.
© 2018 Fannie Mae. Used with permission.