20 Apr Condo Buying Tips for First Time Home Buyers
Buying your first home is an exciting yet stressful time for many first-time homebuyers. In Boston, the condo market is particularly hot, with condo prices surpassing those of single-family homes. With such a competitive market, it’s important to be prepared. Before you commit, here are a few things to think about to make sure your big purchase is perfect for you.
Make a Budget
There are many different costs and figures to evaluate when setting your real estate budget. When figuring out how much you can afford for a down payment, don’t forget to consider closing costs like attorney fees, appraisal costs, and title insurance. When determining how much you can afford for your monthly mortgage payment, remember to factor in costs like your monthly utilities and condo homeowners association fees. Once you’ve set a budget, do your best to stick to it. Trust us, going to see that condo that is $50,000 over your budget is not in your best interest.
Buyers should also keep in mind loan limitations that come with purchasing a condo. In many cases, you may face higher interest rates or be required to put down a minimum of 20% of the purchase price for your down payment. Some condo associations also do not allow Federal Housing Administration (FHA) loans with smaller down payment requirements.
Get to Know Your Neighbors and Your Condo Association
When searching for condos, you should learn as much as possible about the homeowners association running the community. Some condo associations will be small and managed by homeowners in the neighborhood while others may be large enough to have an outside management team. These homeowner associations are responsible for maintenance and upkeep of commonly owned property, like outdoor areas, staircases, or communal hallways. Homeowners associations are also often tasked with enforcing a set of rules or standards for those living within the community. While condo association rules will differ, you can expect guidelines for changes made to the exterior of your unit or to any shared spaces. There may also be regulations about things that affect the interior of your unit, like subletting or noise.
Understand Homeowners Association Fees
When you buy a condo, you will most likely be required to pay regular homeowner fees to the association. This money is used for common expenses like lawn care, trash pickup, snow removal, or water or sewer services. This fee may also go towards a master insurance policy for the property, which provides property and liability coverage for incidents happening in any common areas.
These fees also go to condo reserves, which can be used for any necessary upgrades or repairs. If you are serious about a property, ask to see records for these reserves to make sure they are allocating funds properly and that you’re not signing up for an investment that could become problematic down the road.
Get the Right Insurance
Even though your condo building will likely have a master insurance policy, you should definitely have your own policy to protect your personal belongings and the interior of your unit. Keep in mind that the master insurance policy for your condo will only cover common areas, meaning your personal belongings and anything inside the walls of your unit will not be covered. A condo insurance policy will also provide liability coverage in case someone is injured in your home, much like a homeowners insurance policy would.
When deciding on the level of coverage you need, consult your independent insurance agent to have them review the condo association trust agreement, which will provide details on what is covered by the master condo insurance policy. Your independent agent will be able to help you decide on specific coverages you should have, such as an umbrella insurance policy or loss assessment coverage. At H. Levenbaum, we can also find ways to help you save on your insurance premiums. For instance, having security systems, in-home sprinkler systems, or even an active property management company can all help you qualify for discounts on your insurance policy.
As a local, independent insurance agency, H. Levenbaum knows what you need to make sure your Boston condo is covered. Give us a call at 617-825-3900 or visit our website to learn more.