Unlike single family homes, condos and townhouses are based on shared ownership and responsibility. When you buy either of these properties you normally get only the interior airspace. The grounds and buildings are owned in common with the rest of the owners of the project.
Some townhouses, however, also include a small yard, deck, or patio where owners can hang a hummingbird feeder and have a potted plant or two. Typically, townhouses are individual units built in a row—with or without a common wall while condos are multilevel, but their homeowner associations function in much the same way.
By purchasing either dwelling, you automatically become a member of its association. The first difference between a single-family home and either a coop, condo, or townhouse project is the importance that homeowner associations (HOA) play in your life.
Because the buildings and grounds are commonly owned by the community, HOAs are key not only to the enjoyment of where you live but also to maintaining your home’s value. The second difference is financing.
A development needs to have FHA and/or conventional loan building and project approvals in place so that lenders can get fast loan approvals. Loan qualification is also more involved because homeowner association fees need to be figured into your debt-to-income ratios.
As a result, buying one of these properties is more complex than simply finding a home you like and making an offer. Getting financing and knowing how to evaluate the homeowner association becomes a critical part of the search process, and it ultimately influences your decision as to whether to make an offer.
Of course, if you’re not interested in a lifestyle that is inextricably involved with a homeowners association, there are alternatives, including planned unit developments and twin homes, which have similar amenities to the aforementioned styles of home ownership and are discussed later in this blog.
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