With home prices on the rise, saving for a 20 percent down payment on a conventional loan may seem daunting for many first time home buyers. Even down payments for an FHA loan for as low as low as 3.5 percent can seem out of reach when you are trying to purchase a single family home at today’s prices. Consider however that there are many financing options available for most first-time home buyers including grant money that can be used towards the down payment of a home.
With grant money available, many of today’s first-time home buyers are considering owning a condominium instead. With pricing of a condominium being lower than the cost of a single family home in most cases, this property type is attracting many of today’s buyers. Before you jump on the condominium bandwagon, however; be sure to weigh all the pros and cons and then determine if it is right for you.
Possible pros to owning a condominium
- Lower Price. The initial sales price is lower than a single family home in most cases. Some luxury condominiums could be the same price or lower compared to a single family home.
- Investment. A first time buyer could find a condominium very appealing. At a lower price point, a condominium could be used as an investment property in the future, when you are ready for a larger home.
- Amenities. More often a condominium will have several amenities accessible to the home owner. Community pools, barbecue areas and in some cases rooftop entertainment areas are available for use by the condominium community. Some even have a small gym which could save you money on gym membership in the long run.
- Less required maintenance. Don’t like to shovel snow or cut grass? You may not have to depending on your homeowners association rules. Most condominiums have fees that cover maintenance for common areas.
Possible cons to owning a condominium
- Fees. In addition to your monthly mortgage payment, most condominiums also have a maintenance fee that owners are required to pay. Depending on the association rules, these fees could cover certain common areas such as landscaping, roofs and pool maintenance.
- Noise. Depending on where your condominium is located there could be more noise in high traffic areas. For instance, if your condominium has a pool view, that view may come with added noise from other community members utilizing the pool. Or if your unit is in the center of the building rather than in one of the corner units, you will have neighbors on either side of you that share a common wall.
- Transfer of ownership. When a condominium is sold there may be additional disclosures that must be released to the buyer. This paperwork could take up to 10 days in some states to receive from the condominium association.
- Mortgage loan options. Some condominiums may not be approved for an FHA loan. To be sure, check the HUD FHA Condo Approval List If it is not an approved condominium, discuss your options with a knowledgeable mortgage lender.
Review all the pros and cons and decide for yourself if condominium living is right for your budget and lifestyle. Also be sure to double check the square footage of the condominium in addition. The common areas should not be included in the square footage. Condominiums can be a great purchase for many first time homebuyers. After you decide, put together your plan to purchase starting with checking your credit score. A lender can help you with this if you are not sure how to obtain it on your own.
If you are thinking of purchasing a single family home or a condominium, talk to the lending experts at Lenox/WesLend Financial or call 844-225-3669. As heard on the radio, it’s the biggest no-brainer in the history of mankind.