Many people prefer the condo lifestyle to purchasing a house. They like the idea of living in a more close-knit community and prefer dealing with a condo’s association than a homeowner’s association. According to the Census Bureau, there were nearly half a million condos in 1990, but that figure has gone up in recent years as more people find them appealing. However, they often have difficulty understanding the differences between the buying processes.
Differences Between Purchasing a House and a Condo
Buying a condo isn’t necessarily more difficult than purchasing a house. However, there are a lot of differences that you will need to be aware of. You will want to keep the following factors in mind before starting the process.
Find Out About Association Policies
You will need to speak with the condominium association to find out what their policies are. They may have policies that prohibit homeowners from freely making changes to the unit. Most condo owners are content with these provisions, but you will want to be aware of them beforehand and decide if you are willing to abide by them. The National Post has shown that many condos throughout the country are changing their policies, so you will want to find out what to expect if they will change in the near future.
Ask About Dues
The good news about being an owner of a condominium is that you don’t usually have to pay to make property repairs. However, you will need to pay dues to cover these costs. Find out what they are and make sure that they are affordable.
Understanding Financing Options
The biggest obstacle to buying a condo for most buyers is securing a good loan. Unfortunately, there are a number of lender policies that make it more difficult for buyers to get a loan for a condo than a house. One of the challenges is that Fannie Mae underwriting standards prohibit lending for condos in the following complexes:
- 50% or more of residents aren’t the legal owner of the condo
- 15% or more of the residents are behind on their condo dues
Another issue is that condo buyers are expected to make a down payment of 25% or more. They can still qualify for a loan if they fail to do so, but will need to pay an extra 0.75% interest rate.
Choosing a Broker
Many real estate professionals that specialize in residential properties don’t have a lot of experience with condos. You will want to choose an agent that has worked extensively with selling them, because the buying process is very different. The Reznik Group is a great company that has experience brokering Miami luxury condos.