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I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.
Buying your first home can be an overwhelming experience. Do you really need a whole house, or would a condo be a better option? What’s the difference? What are the pros and cons of each? Here’s what you need to know about buying a single-family home vs. buying a condominium.
A condominium is essentially an apartment that you own. It’s a smaller space, typically in a building or complex with other condos. However, instead of rent, you pay a mortgage—and once that’s paid off, you own it, free and clear.
You also get many of the perks of living in an apartment, particularly the amenities. Many condos include access to things like a community gym, swimming pool, tennis court, and more. The amenities also include some degree of maintenance. You’re responsible for repairs and maintenance inside your home, but anything on the outside is handled by the homeowners’ association. That includes things like mowing lawns, raking leaves, and shoveling snow, as well as any repairs to the driveway, painting the outside walls, etc.
Most importantly, though, a condo is almost guaranteed to be cheaper than a whole house. Since it’s a smaller space, the overall sale price will be cheaper, which means a lower mortgage as well. Plus homeowners’ insurance will typically be less expensive for a condo as well. If you’re just starting out and on a budget, but you’re looking to own your own home, a condo can be a great way to go.
The main drawback to a condo is that it comes with an HOA. Homeowners’ Associations can provide plenty of value, but they can also be a bit demanding. For one thing, the amenities and maintenance you enjoy aren’t free. You’ll pay a monthly HOA fee on top of your mortgage. Depending on several factors, the two together can end up being higher than what you’d pay for a mortgage on a house.
Additionally, even though the mortgage is for less money, you may have more difficulty qualifying for it. Some condo complexes aren’t approved by the Federal Housing Administration, so your loan options are more limited. Conventional mortgages also require the condo projects to meet several guidelines to qualify for a mortgage, not to mention the interest rates are typically higher if you are putting in less than a 25% down payment.
You also have less privacy and less freedom in a condo than you would with a house. Like an apartment, you’ll share a wall with neighbors, and you may be able to hear one another above a specific volume. And if you want to make any permanent alterations to the outside of your home, such as painting the façade a particular color, planting flowers, etc., you must get the HOA’s permission first. They have strict rules and guidelines on what things should look like. Having all the condos in the complex be relatively uniform helps keep their values up and makes them easier to sell.
Is it worth it? It depends on your situation. For the extra money, look at what you’re getting in return. How often will you use the gym, swimming pool, or other amenities? If there’s something there you can get real value out of, then it’s worth paying for. But if realistically, you can’t see yourself using these things very often, then it’s not worth it to pay for them.
Likewise, think about how important privacy and freedom are to you in your living situation. Will you be annoyed by neighbors in close quarters? Do you want the freedom to have a lawn and garden that you can do with what you want or to paint the outside of your house a particular color? If so, then a condo may not be the best option. But if these issues don’t seem like significant deterrents, then it might be something you should consider.
Single-Family Home Pros
In a single-family home, you generally have more space. There are large condos, but still, think of it like an apartment. Would you instead raise your family in a large apartment or a medium-sized house?
You also have more freedom in a house. You can paint it whatever color you want. You can plant a garden anywhere in the yard, with any variety and color of flowers you want. You can even add on to the house: build an extra room or two, expand the kitchen, add a swimming pool, etc. There may be zoning issues to work out, but essentially, you have the freedom to make your house whatever you want it to be.
You also have more privacy. If you want to get to know your neighbors, you can talk to them over the fence without having to hear everything that goes on inside the house. Or if you don’t want to get to know the neighbors, you can build the wall higher or plant a hedge, so they can’t see onto your property.
There are HOAs for houses, but if you don’t want to deal with one, you can look for a house in a neighborhood with no HOA. Or if you like having an HOA and the neighborhood aesthetic they espouse, you can shop around for a neighborhood with one and determine if the regulations are to your liking.
Single-Family Home Cons
The main con of buying a single-family home is the expense. The cost will be higher than for a condo, and so will the monthly mortgage payments. As such, it will take longer before you pay it all off.
You’re also the sole person responsible for repairs and maintenance, inside and out. While it brings freedom, it can also bring hassle. Sure, you can paint the outside of the house bright purple if you want. But you’re the one who has to do that task—or hire someone, which is another expense.
If there are cracks in the driveway or leaks in the roof, those are your responsibility as well. Do you have the knowledge or experience to make those repairs? Do you know where to find a reasonably priced repair or maintenance person who can do the work for you and who won’t overcharge or try to scam you?
Homeowners’ Insurance will cover some of these things, bringing it back to expense. Insurance on a house is generally more than on a condo, on top of what you’re paying for the mortgage. Unlike with a condo, you can choose your insurance carrier. But that also means you have to ensure you’re getting the best deal for what you’re paying in terms of coverage and liability.
Ultimately, the question of a condo vs. a house becomes an issue of what’s important to you. If you’re just getting started and want to save a little money, then a condo is the right choice for you. If you want less responsibility for maintenance and repairs, as well as the convenience of basic amenities, a condo can be a fantastic investment.
If an investment is what you’re looking for, though, then a house might be a better option. Both types of property appreciate in value over time, but houses do it faster, so if you’re looking to resell sometime in the future, a house will provide a better return.
Likewise, if you want a bit more freedom with your property and don’t mind a bit of extra responsibility, you’ll want a single-family home. If you’re an experienced homeowner and/or you have a bit more money to work with, then the single-family home option is more in tune with your needs.
Whatever kind of home you’re looking for, we can help you find a mortgage that will meet your needs. Contact us to learn more!