Condo livingroom
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Some first-time homebuyers struggle with whether to buy a single-family house, a condominium or a town house.

There are factors besides price and affordability that need to be considered before a decision is made. Here are the key questions to ask when deciding which type of residence you should purchase as your first home.

Does the location suit your lifestyle?

For young professionals, a short walk to restaurants, shops and a train station is likely to be a higher priority than extra bedrooms and a big yard.

A newlywed couple in a large metro area might be content in a condo or town house, but when their family grows, the single-family house with a yard has a lot more appeal.

If you work a lot, you may not want to spend your spare time doing lawn maintenance. Your lifestyle would be more compatible with a town house or condo where the homeowners association, or HOA, hires contractors to take care of the yard and the pool.

“Those with many other responsibilities may not have time for home maintenance,” says Jordan Clarke, a real estate agent in Carlsbad, California. “Condos are also a convenient option for people who travel a lot.”

Do you have time, ability to maintain a single-family home?

First-time homebuyers may not have the confidence or experience to handle the upkeep of a single-family home.

A condo or town house can be a good fit for new homebuyers because maintenance and repairs for all common areas are covered by the HOA fees, which all owners pay. Sharing costs is often easier for first-time homebuyers, especially for major repairs.

Owners of single-family homes bear the entire cost of all repairs. If you need a new roof, for example, it’s up to you to find a contractor and pay the bill. In a condo, the cost would be divided evenly among all the owners.

If you buy a stand-alone house, it’s up to you to patch the roof, trim the trees and mend the fence, or else find the right people to do it for you. That alone can be daunting for first-time buyers.

Can you abide by HOA rules?

Owning a condo or town house is not for everyone. There are rules in an HOA that some people find too restrictive.

  • HOAs can tell residents where to park, what type of vehicles they can have on the property, ban them from grilling on their balconies or swimming in the pool after dark. They can also limit guest stays, pets and put restrictions on renting your unit.
  • Neighbors are close by, and they can be annoying, especially if they’re loud.

Can you afford HOA fees on top of a mortgage?

Besides HOA rules and restrictions, there are other things to consider if you’re looking to buy a condo or town house:

  • If some owners don’t pay their HOA fees or assessments, you may have to fork over more than your fair share — and hope you’re reimbursed later.
  • Lenders usually charge higher interest rates for condo and townhome purchases than they do for single-family homes, says Jeremy Schachter, branch manager for Pinnacle Capital Mortgage in Phoenix.
  • When a buyer makes a down payment of less than 20 percent, the lender often subjects the HOA to a “full review” of its finances, Schachter says. A down payment of 20 percent or more triggers a limited review.
  • “You are significantly more tied in value to your neighbors when it comes to condos and townhomes,” Clarke says.
  • Big special assessments can bruise your budget. “If the condo building needs to do any major repairs that cannot be covered by the reserve fund, they will charge each owner a special assessment” on top of regular monthly fees, says Candy Miles-Crocker, a real estate agent who trains other agents and associate broker for Long & Foster Real Estate in Washington, D.C.

Miles-Crocker says she warns buyers that the money they pay for condo fees is not tax-deductible and could be put toward a mortgage.

“Oftentimes, because of the condo fee, buyers can afford more house if they go the single-family route,” she says.

Buying a home, however, regardless of what type of dwelling it is, comes with costs on top of the mortgage and taxes. “The difference being that the single-family homeowner is not paying a monthly condo fee on top of the large repair bill,” Miles-Crocker says.