3 Mistakes To Avoid When Buying A Condo
Posted on: 11 March 2019
Buying a home is beneficial for a few reasons. Not only will it allow you to establish yourself in one location, but it can also be a wise financial decision. Of course, proper planning and budgeting is key to ensure your home purchase is a wise one. While single-family homes are most common, many buyers are seeing the benefits of condominiums. Characterized as a private residence within a multi-unit building or community, condos do offer many benefits, but the actual benefits vary according to the neighborhood your condo is located in. If you are considering buying a condo, here are a few mistakes you must avoid.
Not Understanding Ownership
One of the worst mistakes you can make when buying a condo is not understanding what you will actually be the owner of. With the purchase of a single-family home, you will be the owner of the actual home and the land it sits on. With the purchase of a condo, you will be the owner of your actual residential unit and not the exterior or the land it sits on.
For example, you will own the walls, so you can mount pictures and shelves on the wall or paint the walls a different color. However, you will not own an exterior balcony. Even though you have sole access to your private balcony, your lack of ownership will prevent you from painting or making any permanent updates to this exterior space.
With a single-family home, you will own your driveway and parking area. With a condominium, the building owner owns the driveway and parking area even though you have access to it.
In regards to electrical, heating and cooling, plumbing, and gas connections/hookups/lines, each condominium is different. Therefore, you should ask about specific ownership before making an offer to purchase the condo.
Not Understanding Fees
When budgeting to buy a condo, you need to take the fees into consideration. Each condominium will have their own set of fees that must be paid to the community or the homeowner's association. Again, the fee amounts and what the fees are for will depend on your specific condominium community.
In most cases, the fees could cost $100 or more per month. In some condominium communities, you may need to pay up to $700 per month. If you are buying a luxury condo in a desirable area, you could even pay up to $4,000 per month in fees.
These fees mostly cover maintenance, but not on the interior of your condominium unit. The maintenance fees will be used to make repairs on the interior of the condominium building, including shared areas, such as elevators, staircases, and walkways.
Exterior maintenance will also be a part of these fees, so lawn care and watering, mowing, trimming shrubbery and trees, and making repairs or updates to the exterior of the building, driveways, parking lots, and recreational areas, such as the pool, tennis courts, and community center.
The fees may also cover utilities, such as water, sewer, and trash/recycling. You should ask the owners about electricity, gas, cable, and internet.
Not Understanding Financing
Finally, you need to understand that taking a mortgage out on a single-family home is much different than securing a mortgage to buy a condo. What will actually be required depends on the type of loan you are securing.
It is important to note that both the lender and the condominium association will need to qualify for you for the mortgage. The lender will want to see some financial documents from the condo association, as well. The lender will not approve your mortgage application if the condo association has HOA payment issues, inadequate insurance, or any litigation currently pending.
A great deal of planning is key for a successful condo purchase. This guide will help you avoid a few common mistakes buyers make when purchasing a condominium or luxury townhouse.
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