Mortgage

Shopping for or renting an house: which is healthier for you?

Should I buy or rent an apartment?

Buying a condo can be a big step for first-time buyers.
Prices are often lower than single-family homes, and condominiums can be more convenient
in terms of location and maintenance.

But when it comes to buying or renting a condo, how do you go about it?
right choice?

Both options have advantages and disadvantages, depending on your personal finances
and what stage you are at in life. Here's how to make the right decision.

Check Your Eligibility to Buy a Condo (March 20, 2021)

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Buying an Apartment vs. Renting: An Overview

Buying or renting an apartment is a difficult task
Decision in large parts of the country.

First time home buyers might worry about the down payment as well
Upfront fees associated with home buying. But with rents rising steeply
In many areas, owning a condominium could be cheaper than renting it in the long run
Run.

So how do you know what's right for you at this stage in your life?

In general, buying is better than renting, though
They meet four criteria:

You have stable income and stable employment. You can afford the down payment and closing costs for which you want to stay in the same place
at least three years. You are not expecting a major life event
You would have to move, enlarge, or shrink your home.
These events include marriage, divorce, child birth, or job relocation

When your professional or life circumstances are likely to change in the near future
In a few years, renting out will probably make more sense. You have the flexibility to move around
without selling and you don't have to worry about losing your deposit
(since you didn't do one)

But when you are ready to buy and you like the benefits of a condo
can offer – like a lower purchase price and easier maintenance – than buying one
Apartment could be a good choice.

Check Your Eligibility to Buy a Condo (March 20, 2021)

Advantages of buying an apartment

Owning a condominium offers some distinct advantages over renting out
Not:

Rents continue to rise across the country. Buying a condo with a fixed rate loan will freeze the majority of your housing costs. Owning a condo can create wealth through home equity. Homeowners may be able to take advantage of tax breaks that tenants do not receive

Home ownership is one of the
The greatest way individuals and families create wealth.

Real estate prices are rising steadily
in much of the country. As a condo owner, you are sitting on an asset that
increase in value every year. If you sell, you will likely make more money than you do
consumed.

In addition, you pay your mortgage
helps you build equity while paying rent doesn't.

“Buying creates property
and build credit. Every mortgage payment you make reduces your debt, ”explains Michael
Hill with
Atlas Real Estate Group. In contrast, "every rental payment is in the pockets of your landlord."

There are also advantages to buying a condominium over a traditional single family home.

"When you don't need a big one
Place, an apartment can be right for you, ”says Bruce
Ailion, real estate attorney and broker.

Condominiums are “often half that
Size of an average single family home. That makes them easier to set up, and clean
create, ”he explains.

And condo owners don't have to worry about expensive structural repairs or building maintenance. The House Owners Association (HOA) takes care of the cost of exterior maintenance. (Though you pay monthly HOA fees for that convenience.)

Some condos also offer this
Perks like an exercise room, swimming pool, and assigned parking. An apartment can
also offer additional security.

“Like rentals, there are many
is near city centers, ”says Joshua Harris, clinical assistant
Professor of Real Estate at NYU's Schack Institute of Real Estate. That can
make commuting to work easier and cheaper.

Many first time buyers prefer the convenience and affordability associated with condominium over home ownership.

Review Your Condo Mortgage Options (March 20, 2021)

Disadvantages of buying an apartment

There is a substantial cost
associated with buying and selling a house, regardless of whether it is a condominium or a condominium
independent house.

When you buy a condo, you will
require a minimum of 3.5% down payment (the minimum for an FHA loan). If you want
With the best interest rates and lowest monthly payments, you need to cut 25%
on a conventional loan.

Condominium buyers also have to pay
Closing costs, which can be 3 percent or more of the loan amount. And
Homeowners have additional monthly costs like property taxes and insurance too
Consider.

When you rent you are only in advance
The costs are the deposit of about one month's rent. This
can make renting more accessible to those without large savings accounts.

The monthly rent can also be cheaper
than monthly mortgage payments – although rent and mortgage are average
Neck to neck in some housing markets.

Buyers should consider this as well
A commission of 5 to 7 percent is charged for selling a home.

If you add the cost
Buying and selling costs: “The property had to be upgraded
About 10 percent for you to break even, ”explains Ailion.

That is why buying a condominium is only possible
Recommended if you want to live in it for at least 3-5 years. Otherwise you
could actually lose money if you sell.

Another disadvantage is the unpredictability of future housing costs. HOA fees tend to increase every year, often much more than expected, when the building needs significant repairs.

You are at the mercy of the HOA. While you might find yourself buying a condo to say goodbye to ever-increasing rents, you might find yourself in a situation where the cost of housing increases by $ 25 to $ 100 per year or more thanks to HOA fees.

Are You Qualified to Buy a Condo?

Don't let these drawbacks put you off
They're turned off when you're ready to buy. You would have to consider the same things with everyone
Type of house purchase.

Even the upfront cost of buying one
Condominium shouldn't be a deal breaker.

If you're looking to save a lot, there are down payment and closing expense support programs that can help with upfront fees. These programs are often available to condo buyers as long as they meet creditworthiness and income requirements.

In addition, condominiums are often
cheaper than houses in the same area.

According to the national
Association of Realtors, the median sales price for condominiums in 2020 was
$ 266,000 while the midsize single family home cost over $ 300,000. And the
In some real estate markets, the difference will be even greater.

When you tend to
If you are buying or renting an apartment, the apartment could be your best and the best
affordable starter home.

Check Your Eligibility to Buy a Condo (March 20, 2021)

Advantages and disadvantages of renting

The disadvantages of renting are likely
clear:

You don't see any return on money paid to your landlord. You have no stake in the home equity
Usually less flexibility to make changes or upgrades to the property

However, it shouldn't be renting
seen as a waste of money. When you are at a point in your life where you are buying
If it doesn't make sense financially, then renting is absolutely the best option.

One of the biggest advantages of renting is that living in apartments gives you more flexibility.

“A lot of workers will need today
Change cities to take on new jobs. Having to sell a house is
time consuming, ”explains Harris.

Ailion agrees. "Say
in a year or two that the location or property no longer meets your needs. they
can move at the end of the lease without penalty, ”he says.

"And tenants don't face that
Risk of being sold quickly in a rundown market or due to personal circumstances
Circumstances, ”notes Harris.

Renting is also easier than at home
Purchase.

That's because you get it
Approving a mortgage loan can be difficult depending on your credit rating and creditworthiness
Debt. Also, the entire process, including completion, can take a long time.

To be approved
because a lease can be easier and faster. And you don't have to worry
Save on the down payment and closing costs when you rent.

Plus, renting doesn't make you do it
Fault. When you buy a condo, you are usually taking out a sizeable mortgage
Loan that you repay with interest over a period of 15 to 30 years.

If you ever have any financial success
(for example, due to a divorce or job loss) because you cannot afford yours
A mortgage could put your new home and credit at risk.

Leases on the other hand
Hand, are much less risky and easier to leave.

This is why it is so important to be in a financially stable position before buying a home. This can be a wise decision and investment if you are ready. However, if you're not ready just yet, buying a condo instead of renting it can be a poor financial move.

What to Expect When Buying One
flat

The professionals when buying a condominium
may outweigh the disadvantages for you. However, it is important to know what to expect beforehand
take the plunge.

First, be aware that you have to
Pay regular HOA fees. This monthly fee covers the maintenance of the building
and common areas as well as amenities. HOA fees can vary widely, however
Expect at least $ 100 to $ 200
per month to the homeowners association.

Second, your HOA may have
strict rules against things like pets, excessive overnight guests and noisy
Parties.

"When buying a condominium,
You are essentially entering a realm of majority rules. A good HOA can be one
Blessings, but hell can be a bad one, ”says Ailion.

Third, look at the apartment
Place carefully.

"What is within walking distance?
Distance? How long does it take to get to work? There is nearby public
Asks Hills.

Fourth, prepare to do yours
Homework.

“The biggest risk when buying one
Apartment has a financially insolvent HOA. Condominiums require more care
in that regard, ”says Harris. "Learn the history of the building
Management and previous reviews can be useful. "

Because of this, yours is
The mortgage lender is unlikely to finance a condo that does not meet the strict requirements
Guidelines.

Not all condominiums are allowed
for VA, FHA, USDA or conventional financing. So if you are interested in one
Apartment, check with these agencies (they all have reference pages) or ask about the apartment
Property Management Provider or HOA.

Find out more about buying a condominium with a conventional or government-secured mortgage here.

Buying a Condo Versus Renting: What Is Today's Mortgage?
Prices?

Mortgage rates are still there
at historic lows, while rents continue to rise.

When you're ready to buy, now is one
Good time to secure affordable condo financing.

In a few years you could be
You pay a lot less month to month than you would rent. And the sooner you buy
a home the sooner you start building equity.

Check your eligibility for
Today's Lowest Condo Prices To See What You Can Afford.

Check your new plan (March 20, 2021)

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