If you’re ready to purchase property, congratulations! Buying a home is one of the most important, not to mention exciting financial decisions you’ll ever make – so it’s a good idea to think carefully about what kind of property is best for you. For many people, that means deciding between a house, or a condo. There are multiple advantages to each, so here are a few pros and cons to consider before you make a final decision.
Buying a Condo: The Pros and Cons
One of the biggest pros of buying a condo is that it usually costs less than a house. For first-time home buyers especially, this can be a major deciding factor. What’s more, condos are often newer and therefore in better condition than a house, so as a condo owner you can expect fewer costs and less hassle in terms of upgrades and repairs. In fact, many condo associations even help to organize repairs or maintenance such as plumbing work for you.
At the same time, condos tend to be positioned in close proximity to one another; so if you’re sensitive to noise or plan on having lots of loud social gatherings yourself, a condo might not be the right choice. Another potential con of buying a condo is that many condos don’t qualify for a mortgage from the Federal Housing Administration, known as an FHA loan. These types of loans can help people with a less-than-stellar credit history purchase property, so if you’re planning on seeking an FHA loan to buy your home, check the fine print carefully before choosing a condo.
Buying a House: The Pros and Cons
Usually, purchasing a house means you get more square footage, more privacy, and more ability to set your own rules. While many condo complexes have specific regulations on noise, pets, renovations and yard design, houses typically offer much more freedom in how you use your space. A house will also have more outdoor area, so if you love gardening or are an avid carpenter, you might prefer to choose a house where you can set up a workshop or grow a bed of vegetables. A house also means you don’t need to pay condo association fees, which can equal a hefty chunk of money every month and may also rise unexpectedly.
Still, houses certainly have their own disadvantages. The most affordable homes are usually older and in need of at least a little renovation; and without the support of a condo association, you as the homeowner are fully responsible for all repairs – which can be costly, and also take up a good deal of time. Another potential con is that because houses are bigger and often not as well insulated as a condo, their utility bills tend to be higher.
Houses versus Condos: How About Loans?
In terms of getting a loan, there are a few important things to know in choosing a house versus a condo. Be aware that choosing a condo rather than a house can tack on an added charge of 0.75 percent to your mortgage, leading to a higher interest rate. The reason for this discrepancy is that financial institutions consider condos to be a riskier investment than a house.
However, if you can make a down payment that’s at least 25 percent of the value of the condo, the added charge might not apply. All of this varies from state to state, so it’s a good idea to talk with an experienced loan officer before you start hunting for a home, to understand your loan options with a house versus a condo.