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Buying a Condo vs Single Family Home

What is the difference in buying a condo or a single family home?

First-time homebuyers often consider condominiums as well as single family homes for their first purchase. They may like the location of the condos in relation to where they work, or it may be the relatively lower price.

There is really only one major difference in financing. There are regulations for the percentage of owners versus renters in a condominium project. This came about after the housing and mortgage crash, as many condos were foreclosed because they were investor-owned rentals.

If there are too many renters in a project, then getting a loan can be a problem, or even impossible. Other than that, the financing piece is pretty much the same for condos and single-family homes.

There are considerable differences in ownership rights, insurance and what you can do or not do to modify your unit if you buy a condo. Other than homeowner association rules, you can do pretty much whatever you want with a single family home when it comes to an outdoor hot tub or storage building.

A condominium is different. The condo association owns and maintains the exterior of your unit. You have the rights to use the common areas, as a shared ownership of sorts. You do save some money this way. The condo association maintains the exterior of the units, parking, and common areas.

You only have to buy insurance for the interior of your unit and the appliances and interior fixtures. The condo association insures the exterior. You will also save on water and sewer, as they are also condo association items.

You really only own the interior of your unit. You may even be restricted to what you can do to modify the interior. You are definitely restricted in what you can do to the exterior, including whether you can place things like porch swings or other outdoor items.

It is nice to not have exterior maintenance costs and chores. However, you will be paying a condo association fee, and you do not control it. You have a vote, but the fees can go up or there can be special assessments for repairs or unusual situations.

If you do not keep up with your fees, the association can and will put a lien on your unit so they get their money when you sell. They can even foreclose in some situations. Of course, HOA or homeowner association fees in single-family subdivisions are pretty much the same.

Resale is much the same, but you do have that ratio of renters to owners to consider. You could want to sell and find that a buyer has trouble getting a mortgage if a few more renters moved in while you owned your unit.

Those are the major differences between buying a condo and a single family home. It’s really a personal and lifestyle decision, but you should consider these differences carefully before taking the leap.

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