Aspiring homeowners might gravitate to condominiums over houses. They offer less upkeep, look more modern, and seem to be more affordable. However, if you're looking for value down the road, a house might work out better. Condos also demand certain sacrifices from you when it comes to everyday life. Show
Key Takeaways
Defining a CondoCondos are private residential units within multi-unit buildings, projects, or communities. Residences often share walls similar to apartment units, but they also can be semidetached, like townhouses, or even fully detached. The residents frequently share common areas and amenities like yards, swimming pools, laundry rooms, or garages. Condominium associations play a significant role in the lives of most condo owners. An association, run by a board of directors, maintains the common areas, services, and amenities and is comparable to a neighborhood homeowners association (HOA). Condo owners pay regular monthly or quarterly fees to their associations. Laws governing what condo associations can charge and allow or disallow vary from state to state; however, they all must abide by federal housing regulations such as the Fair Housing Act or the Servicemembers Civil Relief Act. Review your state's laws to determine what might be different where you live. NoteSome condos are part of buildings or communities constructed specifically for that purpose. Others might be converted from rental apartments or might be renovations to a previously built industrial or commercial space. Comparing Condo and House PricesA fair cost comparison considers the amount of a condo's association fees upfront and adds that sum to the total cost of the house or condo. For example, an association fee of $250 monthly is comparable to an additional $50,000 on a 30-year mortgage with a 4.5% interest rate. That extra $50,000, with those terms, would add $253.34 to a mortgage payment. Such fees are essential to calculate when establishing your budget for a new home. In this example, if you can afford the payments on a $300,000 mortgage, you need to adjust your budget by $50,000 to afford the monthly association dues. Much depends on the amenities the condo association covers, however. If your fee pays for vital services such as water and trash collection or amenities like an on-site health club, you might be saving money in areas that would be separate monthly expenses if you buy a house. Pros and Cons of Buying CondosPros
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Selling a CondoLook to the future and the entire condo community when considering the marketability of your unit when you wish to move on. Your unit will never be worth more than an identical unit, plus upgrades. If another owner sells at a low price, that might affect your market value. Some condos will not qualify for FHA loans if the entire community has not completed a Department of Housing and Urban Development review and approval process. However, individual units can be approved in unapproved complexes if they meet certain conditions. Be sure to check the status of the community where you are buying or selling. Frequently Asked Questions (FAQs)How much is the property tax on a condo vs. a private house?Condo owners may save on property taxes over private homeowners, but that isn't guaranteed. For example, in California, the largest component of most people's property tax is a 1% assessment of total property value. Condos might have a lower value relative to private homes in the same neighborhood, but a condo in Los Angeles may cost more than a private home in a small town. How much cheaper is homeowners insurance for a condo vs. a house?Condo owners don't use homeowners insurance. Instead, they use condo insurance. Condo insurance tightly focuses on the dwelling unit, and it doesn't offer as much structural coverage for the building beyond the condo. That makes it cheaper than homeowners insurance, but many other variables determine exactly how much cheaper it is. |