After leaving your parents’ family nest, you probably moved in with roommates to enjoy the college life. Then after you went out and got a job and started your career, you moved in to your first apartment. It’s been a few years and now that the monthly rent payment has gone up, you’re itching to find a place to call your own. Should you buy a single family residence or a condo?
If you’re not in a rush to buy a home, then maybe a condo would be the better choice for you. But before you decide to call up your real estate agent, let’s look at the pros and cons for each option.
If You’re Considering a Condo
There are numerous benefits to choosing a condo over a single-family residence (SFR). For one, the price tag is usually lower than a single family residence- around $300-700k for a condo. Many condo associations are located near a metropolitan area, or at the heart of a city. Restaurants, retail, and entertainment venues are usually close by.
Another big benefit is that there are no maintenance requirements. If you travel frequently for work and just don’t have the time for outdoor gardening work, the Association will make the repairs- for a fee, of course. And just like apartment complexes, you have access to a swimming pool, fitness center, and community events. Condos also usually have security systems and personnel in place to keep your residence safe.
So there you have it. The pros of owning a condo:
- No Maintenance Required
- Amenities Included
- More Affordable than a single family residence
- Security System and Personnel
- Convenient Location
If You Know You Want a Single Family Residence
One of the many perks of owning a home is having a backyard all to yourself. Do you want to build a custom pool or install a high-end grill to celebrate the 4th of July? Owning a single family residence allows you to make the decision without asking permission from an association. Contrary to living in an apartment or condo, owning a home gives you greater privacy. No more sleepless nights because of a newborn, one floor above you.
A condo doesn’t usually appreciate as quickly as a single family residence and owning a home builds equity and your mortgage payments are tax deductions. Unlike lease payments, if you settle on a fixed-rate mortgage your monthly payments are stable and predictable.
The benefits of owning a home:
- Homeowner’s Pride!
- Freedom to Remodel/Renovate
- Tax Incentives
- Property Appreciation
- Monthly Payments Won’t Increase Unexpectedly (if on a fixed-rate mortgage)
San Diego borrowers can find different types of homes to fit their tastes. From historic to modern, or Victorian to Spanish, San Diego has many unique styles to offer. The average price tag of a single-family residence in San Diego is $600k.
The Big Money Question
So you’ve decided on a style or two but now you’re asking the harder questions, how much can I afford? Before reaching out to a real estate agent, it would be wise to contact a mortgage lender to get your pre-approval. A few important questions to ask yourselves beforehand:
- How much in savings do you have?
- How much down payment can you afford?
- And finally, how much can you afford in a monthly payment?
Once you have answered these questions, it’s time to contact a mortgage lender.
The 411 on the Mortgage Process
We understand that lately, the mortgage industry hasn’t had the brightest reputation. The 2008 financial crisis was devastating to many homeowners, yet there have been many changes and tougher regulations for U.S. banks..
- The Federal Reserve raised the standards of required levels of capital and liquidity in banks.
- Banks are required to conduct “stress tests” to demonstrate their ability to operate in conditions similar to those of the financial crisis.
- The Dodd-Frank Act “put the level for intensified regulation at $50 billion in assets” for U.S. banks.
- The creation of the Financial Stability Oversight Council was established by the Federal Reserve to help regulators promote a stable financial system.
With these safeguards, or regulations, in place borrowers can have a greater sense of security when applying for home loans. Before searching for a home, it’s important to get a pre-approval on a loan. Your mortgage lender should explain to you the difference between FHA loans for first-time homebuyers, conventional, jumbo, or portfolio financing, government-backed loans and Fannie and Freddie.
We believe mortgage lenders should empower borrowers to understand what they can afford and give clear advice to move forward with confidence. After receiving your pre-approval, it’s time to go house-hunting!
Once you’re ready to make an offer on a home your mortgage lender should help you get in position to close within 25 days. While the home is in escrow, your mortgage lender will work to assure a smooth path to closing.
What should you look for in a Mortgage Lender?
Obviously we’re biased when we say this… but, transparency should be number one!
In a previous blog post on The Importance of Transparency in the Mortgage Industry, we claimed that
“Transparency shifts the balance of power and creates a more equal playing field, whereby the consumer is empowered to ‘see for him/herself’ and make the best decisions according to their interest and goals, not the banks. “
In today’s competitive and shifting market your mortgage lender should make it their priority to help you stay aware of the events and conditions impacting your purchase or sale.
If you’re ready to start the process of obtaining a pre-approval, or if you have questions and need expert advice, contact us today!