For many young, first-time homebuyers, a condo is the entryway to the world of home ownership. And in many ways, it's a great way to transition from renting to buying real estate. But it does come with a few things you need to know before putting your money on the table. Here are five questions to answer for yourself before you buy.
Do You Have Enough Savings? Owning a home -- even a smaller condo with less overall maintenance than a single-family home -- will come with unexpected expenses. Whether it's closing costs, updates or renovations, insurance or maintenance during the first few years, you will likely need more money set aside than you had anticipated.
Can You Get an FHA Loan? Federal Housing Administration (FHA) loans are extremely popular -- especially for first-time buyers -- due to relaxed rules about the size of your down payment (3.5% instead of a more standard 20%). But not all condos qualify for FHA approval, even if you personally can get the loan. It's best to ensure you can qualify for such a loan before looking at specific condo units, then determine if your chosen building can be used for an FHA loan.
How Active is the Condo Association? The condo association can be a huge help in dealing with problems that will arise for you as homeowners. Lax maintenance, lack of repairs and upkeep as well as inattentive management to neighbor problems are all signs that you may be better off elsewhere -- or that you may have problems reselling down the road. In addition to looking for signs of good maintenance yourself, talk to the neighbors to get their opinions on the association's involvement.
What are the Fees and What do They Cover? Unlike single-family houses, condos generally come with added monthly association fees. You will need to know what these fees are and what they pay for. Do the fees cover yard maintenance, snow clearing and amenities, or will these costs be extra to you as well? Does the association keep a well-stocked reserve of money to pay for things like roof repairs and structural damage? Not investigating the dues before purchasing can mean money lost later on.
Are You Ready for Condo Life? If you've been living in an apartment or dorm setting, chances are that you're already used to living close to your neighbors. But if you aren't social, aren't prepared for some noise or don't like following the rules, condo living may not be for you. Check out your chosen condo at different times of the day and week to see how noisy or busy it gets as well. It's better to be safe than sorry when it comes to living so close to your neighbors.
Answering these five questions and doing some research into your potential first home will help you ensure that the condo you buy will be the home you can love for years to come. Click here to learn more about how to buy real estate.