When you’re shopping around for a new place to call home, there are many things you want to ensure you’ll be happy with long-term. How much you like the exterior design, the interior layout, the nearby amenities, and more — it will all affect your final decision.
One of the biggest deciding factors will be whether or not you can afford the place you’re interested in.
Affordability is a priority when considering any type of new home, but becomes even more important if you’re interested in purchasing a condo. This is because there are several different factors to consider when assessing the cost of a condo.
You’ll want to be sure you’re happy with the present and future financial requirements of your new condo. So, the question is, how is financing a condo different?
Below, you’ll learn more about the aspects of financing a condo to help ensure you’re making the right decisions.
Similar To Any Other Home Purchase
When determining how much money you need to set aside for any new home purchase, you’ll need to consider your down payment and mortgage options. Your down payment will be as much of the purchase price as you can currently afford to pay. The more you can put down, the less you’ll have to borrow in the form of a mortgage.
The down payment and mortgage process for a condo is the same as it would be with any other home purchase, and it’s essential that after you calculate your mortgage expenses, you also factor in the other monthly payments you’ll be making.
One of the perks of condo living is access to some excellent shared resources and amenities. In order to operate and maintain this common property, each unit owner is required to pay a monthly fee. Often, a portion of this fee is also set aside in what is called a reserve fund, which will be used to cover major repair costs over time, when needed.
Some condo complexes also offer features such as storage units and parking, but this may or may not be covered by your condo fees. Be sure to find out what is covered under common expenses, and the cost of anything that isn’t included.
If you’re currently renting, the property taxes could already be included in your rent. When you purchase a condo, however, you will need to pay your own property taxes and this is not included in your condo fee charges.
However, property taxes differ based on an assessment of your property’s value, and since your condo will likely be less expensive than a detached home, you can expect to pay a little less in property taxes.
Home insurance is something you need to pay special attention to when purchasing a condo unit, as opposed to any other residence. While the condo building should be insured by the condo corporation, it generally covers common areas but not your individual unit or personal possessions.
You’ll want to know what you’ll need to insure yourself. Find out exactly what insurance protection is already in place, the policies, and potential instances where you’d be considered liable.
Since condo living involves both individual and shared property, the home warranty coverage can work a little differently. New condominiums are likely covered by a warranty that is applied to shared property.
However, when it comes to the individual unit you own, remember there are limits to the warranty coverage. You’ll want to find out what falls under the shared property information, prepare for limitations and find out what you would need in addition to make sure you're fully covered.
Your condo-shopping experience should be enjoyable, as you take in gorgeous interiors and great amenities that could be all yours. Doing your research and planning ahead in regards to financial matters will help keep this excitement alive, so you can be confident about your purchase.