Before you even start looking for a new place to live, there's a very important question to answer: Are you looking for a townhome, a condo or a single-family home?
You can buy any of them (once you find the right one for you that's in your price range) and build up equity, but they each come with a variety of different considerations that will affect your lifestyle and finances for as long as you live there.
Here are a few of the questions you should be asking yourself and things to consider when making this big, basic decision:
What's the difference?
A single-family home is just what it sounds like: A home that is not physically attached to other homes that is designed to house a single family. It may come with a driveway or garage and a lawn or yard.
A townhome is a series of homes attached to each other, each with its own front entrance from the outside. Often, they are more than one story, and some have garages. (This is not to be confused with a row house, which is similar but often older.) Most townhomes have a home owners' association, which you pay dues to, while many rowhomes do not have an HOA.
You could also consider a condo (short for condominium). In a condo, you own your individual housing unit inside a larger building. The unit owners jointly own common areas, and there is often a condo board of directors that also collects monthly dues to maintain these areas.
With more recent buildings, there are options now like "townhouse-style condos." You may also look at a duplex or triplex. Your Realtor will be able to walk you through hybrid options like those!
The HOA Question + Financial Considerations
With most townhomes (and in some single-family home neighborhoods), there is something called an HOA. This organization has a board of directors and officers, and it has the power to collect monthly dues to maintain common areas. This may include roads, a community pool or other amenities. HOA dues can be anywhere from just $100 per month to more than $1,000 per month, so make sure you know what you're looking at before you put an offer on a property.
The HOA can set rules for your home's exterior, such as what color you can paint, what landscaping you can put in, and how well-kept your home has to stay. The main benefit of this is that you can mostly be assured that your neighborhood is maintained, and it's unlikely that any individual home will fall into disrepair.
The drawback: There may be rules to follow about big things like paint colors and little things like the placement of your garbage cans. You cannot simply opt-out of an HOA if you buy a home in an HOA neighborhood, and you have to pay the monthly dues. Ask your Realtor if a home you're looking at is in an HOA or not!
Condo buildings also have monthly dues to help maintain the building's structure and common areas. Like HOA dues, condo fees can get expensive depending on where you live.
Lifestyle Considerations
There are benefits and drawbacks to each type of home.
With a single-family home, you are more likely to enjoy quiet, privacy, a bigger yard or garage, and the ability to do what you want with your home (unless you live in an HOA neighborhood, which we'll talk about below). The drawbacks are that you have more to maintain with that yard and more.
In a townhome, your situation will be similar, except you may be sharing a wall or a backyard with another family. You may also not be able to add on to your home easily. There is likely an HOA.
In a condo, you usually own a unit in an apartment-style building. Many condos are in elevator buildings, and they may have several common areas, a pool and maybe even a concierge desk that can help accept packages and solve problems. You may or may not need to pay for a parking space. Some condo buildings include utilities, though, which can save you money on electricity and water!
A few questions to answer when you're considering the type of home:
- Do you have kids or pets who would benefit from easy access to an outdoor space? • How much privacy do you want?
- How much maintenance are you willing to handle or outsource?
- Are you willing to follow rules about how you use your property, or do you bristle at the idea?
- Can your budget include monthly HOA or condo fees? If a "special assessment" is due to pay for a new community amenity or major repairs, will you be able to finance it?
- How important is location versus square footage?
- What amenities do you want? Some nice condo buildings have gyms, pools, party rooms, libraries and more. Single-family homes usually do not give you easy access to those.
Fortunately, all of these questions are something your realtor can help you sort out. Once you've decided on the house/townhouse/condo question, come talk to us!
We know mortgage interest rates are high right now, but your credit union can offer you a lower rate on your home loan since we're a not-for-profit institution. Your team at CommonWealth One can also help you navigate first-time homebuyer programs and other state and federal programs for experienced buyers that can help you save.
Ready to take the next step toward homeownership?
Choosing the right type of home is just one part of the homebuying journey. Understanding your mortgage options is just as important.
Join us for our free webinar, “Mortgage Myths That Could Cost You Your Next Home”, on Tuesday, October 20, from noon to 1 p.m. Mortgage expert Kyle Wetzel will break down common homebuying myths and separate fact from fiction to help you make informed decisions.
Learn more and register for the webinar
CommonWealth One is here to help you explore your mortgage options and find financing that fits your homebuying goals.
Remember, we're here for you, for life! We're excited for you and we hope you find a home you love for many years. Happy House Hunting!