(When searching through listings of available properties to buy, one can come across many different types of units available. Beyond the definition of “house,” properties available for sale can include condominiums, townhouses, planned urban developments (Referred to as PUDs), and single-family residences. At Evolve Home Loans, we are here to help guide you through the different types of units, and to help you decide which type may be the best for you.)
Townhouse and condominiums are two types of units that are often confused, as both are units with shared walls and often some utilities. However, there are differences between the two, one of the biggest being what ownership entails for each one.
With a townhouse, ownership includes the unit as well as the land the unit is on – the owner is responsible for the exterior, upkeep, and any front or back yard areas that may come with the home. HOA fees are a standard with townhouses, as are guidelines. Although you may own the property and are responsible for upkeep, exterior paint and yard standards are regulated by the HOA. With shared walls and units, often HOA expenses include repairs on roofing and shared walls, so one can expect higher fees than in a single-family residence.
With a condo, one should think of it more in terms of an apartment, but instead of a rental, it is an owned unit in a shared building. Condos often resemble townhouses, although often are more apartment-like (with up or downstairs neighbors as well). HOAs are also a standard with condominiums. Due to the fact that the HOA is responsible for upkeep of shared exteriors of the housing units in addition to maintenance of common grounds and yards, fees will likely be more than those of a townhouse unit.
Often within both, but especially condos, HOA fees may also include shared amenities such as parking, community centers, and pools (again, much like apartment living). While this can also cause an increase in fees, having these facilities available for use without personally having to maintain any repairs or upkeep can definitely be seen as a benefit.
One thing to keep in mind financially speaking, is that each type of unit comes with its own challenges. While a townhouse is largely treated like a single-family home, condominiums tend to have more restrictions and often a larger down payment may be necessary to maintain a planned monthly mortgage budget. Because a condominium is unit-owned as opposed to land-owned like a townhouse, traditional loans can be more complex – for instance, a Fannie Mae mortgage for a condo needs to meet specific requirements to ensure the viability of the entire project. At Evolve Home Loans, our experienced team is here to guide you through the process of loan types available as you process your decision in carefully choosing the unit that is right for you!
For more information on other property types, be sure to check out our articles on single-family residences, PUDs, and mobile, manufactured, and modular homes.