Buying a condo is one of the most important decisions of your life. You need to be available both emotionally and financially when making this decision.
For this, you must be sure that you are ready to buy a condo, where you want to buy it, and what involves in managing the finances. Where these three concerns sound easy to answer, they often are not.
To help you here, we have answered these concerns to help you take the step swiftly.
Are you ready to buy a condo?
Before you invest in anything that costly, it is imperative to make sure if you are ready to buy a condo or not. Buying a home is a commitment.
You will be obliged to pay the mortgage as per the agreement with the lender. And this could only be done if you are receiving an income from a reliable source covering all your household expenses, mortgage bills, and the cost of maintaining the unit as per the local authority’s guidelines.
The best outcome of this decision is that you will have your own house.
Considering the pros and cons mentioned below to make it easy for you to decide on buying a condo.
- They are comparatively cheaper
- The interest rates are relatively low
- They offer a friendly community
- There is a big list of condos available, giving you a wide range of options to choose the best one
- There are more condo sellers than buyers, which makes this a buyer’s market – you get extra room to negotiate the price
- You need permission from the building's management to renovate your home, and
- You may have to pay parking and maintenance charges
Condos have ever been popular in the country. If there is a dip in the market, it is all due to this year’s pandemic.
Sooner or later, it would get back to normality. And then it might get costly to pay the mortgages and afford a condo.
Where should you buy it?
That is rather tricky to answer. You might get tempted by the new projects. Or want to stick to the ones already standing on the ground.
While considering where you should buy the condo, ask yourself a few questions:
- Are you buying to reside in or rent it out?
- Do you prefer buying near your workplace or a peaceful area?
- How much could it pay you off when you plan to sell it?
You need to be quite sure and objective when choosing the location and neighbourhood. Buying a home does not happen every other day. It requires some wise measures.
Once you have answers to your queries, you must also ask an expert’s opinion to make an even better decision.
For this, a local condo realtor could help you better than anyone. They will help you not only in choosing the best locality but would also help in more related steps.
What are the financial requirements to buy a condo?
It is the stage where you need to show your financial stability. Once you know that you are ready to buy a house (emotionally and financially), you are required to start the practical work.
To buy a condo, you need to win a mortgage. Mortgage lenders are crucial to handle. They will not let you have their hard-earned money that easily. They will require some monetary proof that you can pay off the debts.
For this, they will be seeking information related to your income, credits, and the initial amount of deposit (down payment). Let us dive deep and understand how these three areas are so important.
The lenders will only pay you if you have a reliable source(s) of income. The income should be more than enough to cover your current expenses in addition to the amount related to buying a house.
Here the lenders will use several ratios to decide if your income level meets the minimum requirements to have a mortgage.
While the lenders are not concerned with what you do (employed by a company or a businessperson), they are only interested to know that you are eligible to work, pay the taxes, and have a continuous source of income.
There is a general rule of thumb that requires you to have a gross household income five times more than the expense involved in buying a house.
Here the lenders will review your credit history. Have you been paying off your debts on time under the present terms? This sort of question is more relevant here.
The best way to tackle this is to maintain a good credit history. For this, you can consider the below key points:
- Monitor your credit score
- Pay the dues (any kind) on time and as per the agreement
- Have multiple sources of credit to distribute your expenditures over different sources
- Keep the credit balance between 0-50% to enjoy the maximum benefits
Keeping a good credit history will ensure winning a mortgage.
It is the part that requires your investment. Lenders require you to pay the down payment. If, for instance, you do not have that kind of money, you still could score the mortgage by first getting a personal loan to pay the down payment.
You could also arrange this amount if your family is willing to pay you the sum along with the proof that it comes from a valid source of income.
The down payment is dependent on several factors, including:
- Purpose of buying the condo (residential or investment)
- The source(s) of your income
- Other transaction costs (lawyer’s fee, inspection charges, etc.)
For a quick overview and a comparison, you could use online mortgage payment calculators. These will help you a lot in your decision-making stage.
Ask for an Expert’s Opinion
Once you have the answers related to these three elements, you also need to consult an expert’s opinion. For this, you can always reach a local condo real estate agent. They have spent years in the field and would be able to assist you further.