The Keys to Buying a Condo or Townhouse

There is a Condo or Townhouse suitable for almost everyone. Condominium ownership is easy to understand. A condominium complex, however it is laid out, is a shared ownership community. Residents own their own apartment or unit- (what is within the exterior walls) -but not what is outside those walls. They also own a proportional share of what is known as the common areas. Those areas include the condos’ outside walls, driveways and roads, as well as inside the complex and all of the land within the complex’s boundaries, including the landscaping around each unit. If there is a pool, tennis court, and clubhouse, those too are held jointly by all owners. Control of the common areas in a condominium development is exercised by the condo association. As an owner, you are automatically a member of the association and have a voice in the actions and the governing of the association. You are required to pay a monthly fee to the condo association to help support its activities. The fee pays for property maintenance and repairs to the common area; also included in the monthly condo common charges: insurance, condo management fees, utilities and the upkeep of the amenities.

When work is required in your individual home, such as plumbing, painting or an appliance repair, you arrange it and pay for it yourself. Some local communities, like Blue Ridge in Medford or Bretton Woods in Coram, include your own golf course. Most include a clubhouse and community pool. After you understand the definition of condo and townhouse ownership you are ready to decide what amenities and features are most important to you.

Some local communities like Whispering Pines and Colonial Woods in Yaphank offer homeowners a basement and garage. Some of the homes include a fireplace as well. Remember: the more amenities a development offers its residents the higher the monthly common charges. Golf courses, heated indoor pools, bowling alleys, and workout gyms must be maintained by the monthly fees. When deciding on a development, consider the amenities and their monthly costs. Are you going to use the facilities regularly and receive a benefit?

When deciding how much to invest in a condo or townhouse, review your personal finances. How much monthly debt do you have? Is your income going to rise in the near future? Have you kept track of your monthly expenses? Keep in mind after you make your monthly mortgage payment, you must still purchase food, pay for utilities etc.; other considerations are retirement planning, although your condo or townhouse can be part of your retirement plan. Real estate may be the world’s best way to increase personal net worth long term.

It makes good sense to speak with a mortgage consultant prior to making an offer on a condo or townhouse. They will review your credit, debt and cash reserves and help determine the right loan program for you. A mortgage consultant may qualify you for the maximum amount you can borrow. You as the buyer decide what monthly payment makes you comfortable.

You are now ready to begin the search for your new condominium or townhouse. Choosing a condo real estate agent is your next step. Ask friends or family for a referral. The agent should be familiar with local developments and communities. The right real estate agent will be the foundation of your purchase. Your agent can recommend any service you may need in the purchase. They can refer attorneys, home inspectors and mortgage brokers, just to name a few. In addition, he or she will communicate with all parties in the transaction.

Once you have located a condo or townhouse you wish to purchase, you need to consider your terms. How much are you offering the seller? Some of the terms (information) the seller will need to know are: how much money on contract, when do you expect to close? How much total are you financing with a bank? Do you have a pre-approval from a bank or mortgage company? This would inform the seller and their real estate agent that your credit and income have been verified. All this information will be contained in a real estate binder. The binder is all the information and terms agreed on by both parties to be faxed to your attorney.

Sale contracts for the home will be drawn up based on the binder. The best way to determine a fair price or value on a condo or townhouse is history. When you have located a home you would like to buy and would like to make the seller an offer, be prepared! How many of those models are available to buy? How long has the condominium or townhouse been on the market? Do you know what the sold prices have been in the last 90 days?

After you and the seller have agreed on terms and price you're ready to go forward, you may want to consider a home inspection, which you are responsible to pay for. A realtor can recommend a home inspector for your condo or you can find one on your own; make sure the inspector is licensed and insured. Included in their fee is an evaluation of the home’s structure, electrical system, plumbing, heating and cooling. This analysis should make you feel comfortable going forward with the purchase. After you receive the written report (between 2-3 days), you can decide if there are any major concerns: you have not signed a contract of sale and may decide not to go forward if the report worries you. However, any inspection of a condo or townhouse will discover some flaws or imperfections.

A good report should include recommended updates or changes for you when you move in. At this time, contact your attorney to make an appointment to sign the contract of sale. You must bring your contract money (5% to 20%)-whatever was agreed on. The contracts are normally drawn up by the seller’s attorney, but your attorney will review the contracts with you. You will need a copy of the contracts for your mortgage company, as well.

Once both parties have signed contracts you have a “fully executed contract’” and the bank will proceed with your loan. An appraisal will be ordered by the bank to protect their interest in the loan. The appraisal is paid for by the buyer and is an opinion of value based on recent sales. The condition of the condo or townhouse is considered when the bank appraiser determines value.

Contact an insurance rep and arrange for an insurance policy to be placed on the condo or townhouse. The policy should cover the interior and your possessions. The homeowner’s association has a blanket policy on the exterior of your home; therefore, your premium should be less than a residential home. Your lender should have furnished a copy of your closing costs for you, which include property taxes paid in advance, loan fees and title fees. You will be notified by your attorney or mortgage company when you receive your written commitment.

The condo closing- or settlement date-is set and agreed on by all parties. You will be joined at the closing by your attorney, and he or she will help explain the paperwork and documents you will be signing. At this point, the seller will give you the key and you are a homeowner. You can ask your real estate agent or attorney about the star program. This program reduces your property taxes and can only be applied for after you close on the condo or townhouse. Congratulations and good luck!