There’s something to be said for having peace of mind, even if it might cost you. For many, that can easily take the form of having a place to truly call your own—space that gives you privacy and the ability to customize it to your dream preferences.
Deciding on a condo vs. house may hinge on your desires about privacy, a yard, rules, the amount of upkeep, and initial and ongoing costs.
There are upsides and downsides to both buying a single-family home and a condo.
To find out what might be right for you, you’re invited to take the House vs. Condo Quiz, which can help to answer two important questions:
• Does it make sense to purchase a home or condo, or should I stay where am I for now?
• If it does make sense to buy, which one could be better for me?
Now that you’ve taken the quiz, are you clear about which direction you want to take?
You might want to take these pros and cons into consideration as well, and check out this home affordability calculator.
Pros and Cons of Buying a House
Cost is a factor, especially when buying in a hot market.
The median sales price of existing single-family homes was $367,000 in July 2021, compared with $307,100 for existing condos and co-ops, the National Association of Realtors® reported.
These are typical factors to weigh when buying a house vs. a condo.
Pros of Buying a House
• More privacy and space, including storage
• A yard
• Ability to customize your home
• Room to garden and create a pleasing outdoor space
• Control, including pet ownership
• Sometimes no homeowners association (HOA) or dues
• Generally considered a better investment
Cons of Buying a House
• Higher initial and ongoing costs
• More maintenance inside and out
• Higher utility bills
• Higher property taxes and homeowners insurance
• Possibly fewer amenities
If, after taking the quiz and weighing the pros and cons, buying a house feels like the right choice, you can start brainstorming about size, style, location, and price; attending open houses; and looking online.
Learning how to win a bidding war might also come in handy, depending on the temperature of the market.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Pros and Cons of Buying a Condo
Condominium owners share an interest in common areas, like the grounds and parking structures, and hold title to their individual units. They are members of an HOA that enforces the community rules.
This is the general lay of the land in the condo vs. house universe.
Pros of Buying a Condo
• More affordable
• Amenities included
• Less expensive homeowners insurance and property taxes
• Covered repairs and upkeep
• Lower utility bills
• Security, if the community is gated or patrolled
• Access to urban perks
Cons of Buying a Condo
• Less privacy
• No yard
• Rules and restrictions (noise levels, outside wall colors, pets, and more)
• Typically less overall space
• HOA fees
• Limited parking
• Slower appreciation in value
Plus, the mortgage interest rate and down payment are often higher on a condo vs. a house of the same value, though that isn’t always the case, especially for a first-time buyer of an owner-occupied condo.
Conventional home loan mortgage lenders sometimes charge more for loans on condo units; they take into consideration the strength of the condo association financials and vacancy rate when weighing risk.
Mortgages backed by the Federal Housing Administration (FHA) are available for condos, even if they are not part of an FHA-approved condominium project, with a relatively new process called “spot approval.”
An FHA loan is easier to qualify for and requires as little as 3.5% down, but you’ll pay upfront and ongoing mortgage insurance premiums.
What Are the Costs of a House or Condo?
Of all of the costs listed above, perhaps monthly maintenance fees and HOAs come to mind most when thinking about condos vs. homes.
Fees and boards are often associated with condos, but new-home residential developments include HOAs at increasing rates, according to iPropertyManagement, which provides information about property management, investing, and real estate law.
Homeowner fees are growing more than twice as fast as the average home value, iPM says, and vary drastically, from under $200 a month to thousands, depending on amenities and ZIP code.
For condos, the fees can go toward basic upkeep, maintenance of building exteriors, amenities, and insurance that doesn’t fall under individual homeowner’s insurance. (Condo owners typically are responsible for the interior of their units, while townhouse owners are usually responsible for maintaining the inside and outside alike, so their HOA fees may be smaller.)
Buying into a co-op means purchasing shares or an interest in the entire building. The monthly fees for co-ops tend to be higher than condo fees.
Before buying into an HOA community, it’s imperative to vet the board’s finances, including its reserve fund, how often it has raised rates in recent years, whether it has collected any special assessments or plans, and whether it’s facing any lawsuits.
Recommended: How to Buy an Apartment
When Is a Good Time to Buy?
You may know what you’d like to buy (condo vs. the house) and where (in what neighborhood), but do you feel as though now is the right time? If so, fantastic.
You might decide, though, that you want to rent for a while longer under certain circumstances, which can include:
• Hoping to wait out an overheated market and looking at price-to-rent ratios
• Wanting to save more money for the down payment and closing costs
• Needing to boost your credit score first
• Wanting to pay down credit card debt or other debt
• Needing more time to look at houses and condos before deciding
If you feel ready, is now a good time to buy? If your finances are stable and you can get a mortgage at historically low rates, buying may make sense. Then again, you may not want to or be able to pay top dollar.
Check out local real estate
market trends to help with
your home-buying journey.
The condo vs. house decision depends on a multitude of things, but giving thought to the pros and cons of buying a condo vs. a house can at least give you a direction to lean toward.
If you’re ready to get prequalified for a home loan, know that SoFi offers competitive mortgage loan rates for single-family homes and condos with as little as 5% down.
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