As you explore your homebuying options, you may find that a condo is the perfect fit for your lifestyle, budget and homeownership goals. But what exactly is a condo, and how does it differ from other property types? Here is everything you need to know before buying a condo.
A condo is an individual unit within a larger residential development in which residents own their units rather than rent them. A condo can be any architectural style: garden-style, a townhouse, a high-rise, or a detached home.
For some buyers, condos combine the benefits of apartment living, such as convenient amenities and fewer maintenance responsibilities, with wealth-building opportunities and the stability of homeownership. Condos can also be more energy-efficient, saving you money on utility bills.
THINGS TO CONSIDER BEFORE BUYING A CONDO
There are a few important things to keep in mind when exploring the idea of a condo purchase.
Condo association: Most condos have a condo association, which is similar to a homeowner’s association (HOA), that oversees the financial management and the upkeep and maintenance of shared areas.
Condo association fees: Fees will vary depending on what services and amenities are included. Make sure you factor this cost into your homebuying budget.
Rules and regulations: In addition to maintenance, the condo association is also responsible for enforcing any rules and regulations that property owners must follow.
Long-term plans: Even if you plan to live in the condo for a long period of time, it’s a good idea to think ahead about your options when you are ready to move out. Will you keep it as a rental property? Will you sell it? What improvements can you make to increase the property value?
THE BUYING PROCESS
Mortgage pre-approval: Before you buy, you’ll want to compare several mortgage lenders and choose one you’d like to work with. Your lender will help you complete a loan application, determine if you qualify for a loan, and issue a pre-approval letter detailing the amount of money they are willing to lend you. This is an important step as it will help you determine the price range for your search.
Finding the right condo: Once you know what you can afford, work with your real estate agent to discover available properties that match your housing needs. Do your research on the property to make sure you have a full picture of what you’re buying.
Making an offer: When you’ve found the right place, your real estate agent will help you determine an offer amount, submit and negotiate your offer, and finalize the contract.
Review the resale package: Once you make an offer, check to see if a Resale Disclosure Package is available. The information contained in the package will help you to determine if the condo is financially sound.
Inspection and due diligence: An inspection and appraisal will help ensure the amount you pay is aligned with the home’s value.
Closing the sale: The final step in securing your new condo is closing. On closing day, you’ll pay closing costs and sign documents to make the sale official and get the keys to your new home.
Depending on your situation, purchasing a condo could be the right choice as you explore your next homebuying opportunity. If you are in the market for a condo, building a trusted homebuying team and exploring available resources can help you navigate the process with confidence.
SOURCE: Freddie Mac