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Buying a condo is sometimes a more affordable option for those looking to purchase their first home.  In addition, condos often offer desirable conveniences such as swimming pools and gyms.  These are luxuries you might not have at your disposal with the purchase of a single-family home.  However, there are many important things to look into when considering the purchase of a condo.

Before you begin your condo search, make sure that condo living is right for you.

Keep in mind that although there may be conveniences to enjoy, there may also be restrictions to be mindful of.  For example, strict rules are often enforced regarding the kind of pets that are allowed, i.e., certain breeds or sizes of dogs might be restricted.  You may also have to adhere to “quiet hours” and various rules (or restrictions) on decorating.

For many, having the option to purchase instead of rent is worth the above restrictions.  If this is the case, review and understand the below to make sure you are investing wisely.

A condo association runs a condo, which is a unit that you purchase within a space shared by all condo owners.

When purchasing a condo, you are essentially entering a business agreement with all of the other owners in your complex.

You are relying on your neighbors to adhere to the condo association’s rules and regulations in order to maintain facilities, help with the upkeep of the complex and keep peace amongst neighbors.

Always investigate the management and stability of the condo association.  Is the association financially stable?   It is each owner’s responsibility to pay an association fee each month.  The fees collected are for repairs and maintenance of communal areas.  If owners are not paying fees, you might find that simple repairs may go by the wayside.  Also, ask if there is a reserve fund and how the association handles emergency repairs.

The financial aspect is also important. Lenders might not approve the loan if the association has not been able to collect dues for its owners.  Fanny Mae and FHA have strict guidelines on financing and if the percentage of uncollected dues is higher than 15 percent, financing will likely be denied.

In terms of being approved for financing, you also need to determine how many of the owners are absentee owners.  For example, if the number of absentee owners, or investors, in any particular association is higher than 49 percent, FHA will not approve funding.

Insurance coverage is another important topic to inquire about.

Condo insurance covers the unit you purchase (not the building) and the Master Insurance Plan, held by the association, covers common areas. Request to review the Master Insurance Plan.  Many associations will reduce insurance coverage in order to lower expenses.  If there is damage to the common areas, which is generally covered by the Master policy, the association often requires condo owners to pay special assessment fees, in addition to association fees, to cover the cost of repairs.