Do you know how to determine when a condo is costing you more than a single family home? For example, did you know that a $580,000 Condo could cost you more to own per month than a $630,000 Single Family Home? I promise, it’s not a trick question. Let me show you when a condo is costing you more than a single family home.
Condo vs Single Family Home
Recently, I had a client who was trying to determine which home to purchase, a condo vs single family home. They wanted to get the best home for their money but not break the bank on their monthly budget. In the end, they narrowed their choices down to two possibilities.
The first choice was a beautiful $580,000 condo and, the second, was a larger, single family home being sold for $630,000. The neighborhood, space and overall design of the single family home matched their needs better than the condo but the home was on the top side of their budget. For that reason, they thought the less expensive condo would make better financial sense. It sounded like a logical conclusion.
Financial Review Is Key
However, a financial review is key for a true analysis. After I conducted a complete financial review of the two possibilities, I found the less expensive Condo would have cost them more money per month than the Single Family Home. You might be asking- “how’s that possible?”
The reason – there are more monthly expenses associated with homeownership than just the loan. Besides the principle and interest that will be due on any loan you will also have to pay some combination of taxes, insurance and possible HOA (Homeowner Association) fees. These are not all created equal. For my clients, I knew that the larger loan required for the single family would cost them an additional $290 per month. However, the combination of the higher tax rate in the condo’s city as well as a higher homeowner association fees would cost them an additional $410 per month. That means the condo would actually cost them an additional $120 more per month to own.
Complimentary Financial Review
By reviewing all the financial facts, my clients not only got the house they really wanted but also saved themselves a $120 a month. So before shopping for your next home, give me a call and I will be happy to conduct a complimentary financial review of your situation. #notallbrokersarecreatedequal