When a friend invites you over for a housewarming party, you won’t necessarily be knocking on the door of a house. In fact, you might find yourself being welcomed to a condominium. What is the difference between a condo and a house? If you’re interested in shopping for a home of your own, understanding the pros and cons of these two popular forms of housing can help you make the best choice for you and your family.
Exploring the Difference Between a Condo and a House
People often struggle to define what a condo is. Some offer the idea that it’s an apartment that you can own. Others suggest that it’s a house without the worry of a yard. While they might capture the spirit of a condo, neither of these really explains exactly what a condo is. Fortunately, realtor.com does. According to the website, a condo is a private residence within a building or community of multiple units that is owned by an individual or family. Traditionally, condos are part of a larger building, but not all of them are; some are detached units. However, one thing that all condos do have in common is that certain areas like yards, pools, garages, recreation rooms, or gyms are shared. Condo owners are able to use these common spaces without bearing the sole responsibility for their upkeep.
The Boundaries of Legal Ownership
Are you still unclear about the difference between a condo and a house? Perhaps the easiest way to draw a line to differentiate between condos and houses is to examine the boundaries of legal ownership for each type of housing.
As Mortgage News Daily explains, when you purchase a condo, your boundary line is the outside of your unit’s interior walls. Everything beyond that, including the exterior of the building, is owned by the condo association and is jointly controlled by all the owners of the condominium complex. Since your ownership is limited to just the interior of your unit, you aren’t expected to bear the cost of maintaining and repairing the complex alone. Much like they share use of the common spaces, the owners of the condos in the complex share the responsibility of maintenance and repair.
When you buy a house, on the other hand, you get the house, the land that accompanies it, and total control of the property. Of course, this autonomy comes with a price. Since it’s all yours, you’re solely responsible for all routine maintenance and any necessary repairs.
More Differences Between Condos and Houses
When contemplating the difference between a condo and a house, the disparity in what you actually own is just the beginning. According to Equifax, there are several other differences that should be acknowledged, including the following:
When you buy a condo, you will be required to join the condo association. When you purchase a house, you may have to join a homeowner’s association (HOA), but this varies depending on where you buy. Not all neighborhoods have an HOA. Both types of associations are created by the developer, assess membership fees, are governed by a board elected by the property owners, and are charged with maintaining and repairing any common areas. However, condo associations are generally more powerful. While HOAs can require that you seek approval for any exterior alterations, condo associations can do much more. They can dictate who is allowed to buy a condo, determine whether leasing is an option, decide what types of improvements are allowed within the unit, require specific maintenance to be performed, regulate everything from pets to parking spaces, and even set rules for how your condo can be marketed if you should decide to sell it.
While the limits of condo ownership might seem inhibiting to some, they are an advantage when it comes to insuring your home. Because condo owners are only responsible for the interiors of their units, insurance is often more affordable. In contrast, homeowners will need insurance to protect the entirety of their living space.
Securing a home loan that will allow you to purchase a condo may be trickier than getting one for a single-family house. Many lenders are wary because some of the biggest losses in the last housing crash came from defaults on condo mortgages. As a result, lenders are quicker to say no to condo loans, and they often charger higher interest rates when they do grant a condo mortgage (source). If you hope to use a loan secured by the Federal Housing Administration, you’ll need to be especially careful about selecting a condo. To qualify for an FHA loan when you’re buying a condo, you must follow some basic eligibility guidelines concerning commercial space, delinquent dues, reserve funding, insurance coverage, leasing, and more.
Is a Condo Right for You?
Should you be shopping for a condo or a house? Before deciding on a property, Bankrate suggests that prospective buyers consider the pros and cons of its location, the rules of ownership that are part of the deal, and the lifestyle that the property offers. In addition, the price of the property, the lending options available for it, and the maintenance costs and monthly fees should also be reviewed and scrutinized.
Understanding the difference between a condo and a house can help you find the home of your dreams. To discover more about the lending options available to you for condos or houses, schedule an appointment with a financial professional today.
If you live in the Kansas City area, contact PrimeLending. Our committed team will help you navigate the home hunting process so that you can purchase the home of your dreams. At our branches located throughout Kansas City, we can help you explore our wide variety of loan products and programs. Plus, PrimeLending utilizes delegated underwriting, local appraisers, and cutting-edge technology to accelerate the underwriting and closing processes. We’re more than happy to navigate you through the process of buying your first home. When you’re ready to learn more, please give us a call at 844-701-5626.