Are you planning to buy a condo? Compared to a single family home, a condo can be more affordable. As far as the former of these is concerned, prices are rapidly rising and many of you may be seeing your dream of being a homeowner wiped out. Don’t lose hope, you can still be a condo owner, and this will probably be more suitable if your budget is low. Once you decide if this is what you want, you will need the following information.

Know the buzz words

Buying a condo is very different from buying a standard home. There are different things involved in the process, and you should familiarize yourself with them. I have listed a few of them here:

PITI

PITI is an abbreviation of principal, interest, taxes and insurance.  In other words, these four elements combine to form your mortgage payment, which you will be paying on a monthly basis.

HOA Dues

Homeowners Association or HOA is the body which manages the condo and maintains it in a good condition. When you live in a condo, you have to pay a monthly association fee. HOA monthly dues can fall anywhere between $80 and $500, depending on the location of the house, its condition and a number of other factors.

PMI

Private Mortgage Insurance or PMI provides coverage to your lender should you default on the loan. If you can pay a down payment greater than 20%, you will not have to buy this policy, but if you cannot, it is included in your monthly payment.

An HOA is responsible for maintenance

An HOA manages the condo and plans out its budget. This body handles the repairs, landscaping tasks and performs a number of other duties. As already mentioned, you have to pay the monthly charges.

Condominiums are priced lower

The prices of a condo can be much less than that of a single family home – sometimes with a difference of nearly $100,000 – which is regarded as normal.

Mortgage rates may be higher

Acquiring a mortgage on a condo is not that difficult if you agree to a higher rate. There are often HOA issues, which is why lenders are not always keen to make an investment and grant you the loan. If you are considering purchasing a condo, talk to me and I will guide you through the whole process.

Source:  www.finance.yahoo.com

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