You're ready to take the plunge and buy your own home, but from townhouses to single-family homes to condominiums, the choices just seem endless. What's right for you? Take some time to consider all your options as the best fit can depend on your lifestyle and priorities.
What's the Difference Between a Condo and a Townhouse?
A condo shares walls with other residences – it's more or less an apartment that you own rather than rent. Townhomes are also usually attached to other residences, too, but you generally wouldn't have another unit on top of, or beneath, yours.
When you buy a townhouse, you also buy the little section of land that it sits upon. You own and are responsible for the upkeep of the exterior. Not so with a condo.
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You pay monthly "dues" to a homeowners' association in both cases, contributing to the cost of maintenance and repair of the exterior of the buildings and common areas. These fees can run anywhere from $100 to $1,000 a month or more depending on how high-end the complex is and the kinds of amenities, such a community pool, it may offer. And the fees can increase with relatively little warning.
That said, what if you simply rented a townhouse or condo instead of buying one? Wouldn't that be cheaper and easier? Not necessarily. Ownership is actually cheaper than renting in isolated areas of the U.S. As a general rule, however, purchasing a home will cost you a lot more than leasing one, about 50 percent more based on median costs.
You could pay less than $500 a month for a mortgage in Little Rock, Arkansas, but renting a place there would cost you more than $1,100 a month on average. Other locales where it can be cheaper to buy than rent include Louisville, Kentucky and Greenville, South Carolina. Tulsa, Oklahoma and Gary, Indiana also make the list.
The Costs of Condo Ownership
A condo is usually your most affordable housing option, but like anything else, it depends on what you're buying. Two bedrooms in a prime neighborhood will cost you more than a one bedroom on the edge of town. Community amenities greatly factor into the equation as well.
And there are sometimes "hidden" costs. Some condo associations require that homeowners pay extra HOA fees in months when other owners fail to pay. It might not seem fair, but neither is watching common areas fall into disrepair because other homeowners aren't paying their bills.
The same could happen if something major occurs to the property that's going to cost a bundle to repair, like a roof blowing off or the swimming pool dropping into a sinkhole. You might have to pony up more in the way of association fees to raise money to fix the problem. This is sometimes called a "special assessment" and it can happen when a condominium association hasn't tucked aside sufficient cash reserves from all those regular fees the owners pay each month.
One last caveat – some mortgage lenders tag condo and townhome purchases with higher interest rates. And while you can still deduct mortgage interest on your taxes as of 2018, you can't deduct those HOA fees.
The Costs of Home Ownership
You might think that it would be cheaper to buy a single-family home since you won't have to deal with those association fees. But if you buy a home in a private community, you might still have to pay HOA fees toward the upkeep of streets and curbs and for snow and trash removal – plus, you'll have to pay for the maintenance of your own home as well.
The bottom line is that the lawn must still be mowed and the roof might still need repair. HomeAdvisor recently did a study that showed that 46 percent of homeowners spent more on maintenance and repairs in the first year than they'd thought they would, and 57 percent experienced unexpected events that cost them additional money out of pocket. If you own a single-family home, you have to pay the added expenses yourself without the rest of your community chipping in. That said, you wouldn't necessarily have to foot all these repair bills every single month, and HOA fees are typically due every month.
When It's Time to Decide
Choosing between a condo and a detached home can come down to how well you handle surprises. If you want the security of knowing you'll pretty much be spending the same amount for upkeep month after month, a condo might be the route to take.
But, of course, happiness comes down to more than just dollars and cents. If you're a bit of a loner and prefer that your neighbors don't live directly on the other side of your living room wall, a condo probably wouldn't be a good choice for you. But then there are those amenities. Can you really afford your own swimming pool if you purchase a single-family dwelling?
Townhouses usually involve more in the way of hands-on upkeep than condos do, and detached homes require the most physical maintenance of all. If you're someone who actually enjoys pushing a lawnmower with the sun beating down on your head, a single-family home might be your best bet – especially if you want a yard where your kids or your dogs can play. If you'd rather spend your free time socializing, a townhouse or condo might be the way to go.
It can also depend on how independent and headstrong you are. That homeowners' association is likely to dictate a lot of aspects of your life, from where you can park and the hours at which you can use community facilities to what pets you can keep. If you purchase a single-family home that's not part of a development, your life and decisions are your own.