October 2020 | Chicago Luxury Condos for Sale | Luxury Living Chicago Realty

Condo vs. Townhouse Mortgage: Understanding Financing Differences

Posted on October 27, 2020March 10, 2021 by LLCR Staff

Buying a property is an exciting endeavor, but it is one that requires research and understanding beforehand. Part of that research involves learning the differences between a condo vs. townhouse mortgage.

Thinking About Buying a Condo or Townhouse?

If you’re in the process of purchasing a home, it’s crucial to weigh the differences between condos and townhouses to determine which property makes the most sense for your situation.

Condos and townhouses have subtle but unique distinctions that are important to identify.

A condo, or condominium, is a single building or a community of buildings with separate units owned by individual residents. They generally share walls with adjacent units. Residents own and maintain their unit’s interior but don’t own the property on which it sits. The Homeowners Association maintains the exterior, lawn, and communal spaces.

A townhouse or townhome is a single-family home that shares one or more walls with other independently owned units. They often feature two stories, as well as outdoor space. Residents own their interior units, as well as exterior walls, the lawn, and the roof.

What to Know About the Mortgage Options for Each and Any Key Differences

When it comes to comparing mortgage options for condos and townhouses, there are a few primary distinctions. One of the biggest differences has to do with the fact that a condo owner doesn’t own the land. Owners are only purchasing the space between the unit’s walls.

With a townhouse, owners have rights to the dirt and everything above and below the dirt. Getting a loan for a townhouse works similarly to getting a single-family home and is less complicated than getting a condo loan.

When obtaining a mortgage for a condo, one has to qualify as a borrower and ensure that the condo is approved based upon various government requirements. While the beginning steps to qualify for a mortgage are similar to applying for a loan on a condo, the rest of the process involves more action.

Similarly to a townhouse mortgage, a loan officer checks the borrower’s income, credit, and assets and determines the best product for the purchase or refinance. In addition to evaluating the borrower’s financial health, the lender also needs to assess the financial health of the condo. Additionally, lenders examine the condo’s Homeowner Association before the mortgage approval.

If you’re applying for a condo mortgage, you will need to determine whether you’re financing a “warrantable” condominium. This simply means it meets the legal guidelines for mortgage lending. Non-warrantable condo financing is more expensive, requires higher down payments, and may not even be offered by some lenders.

How LLCR can Guide you in Finding and Buying the Right Property for you

Whether you still need guidance comparing the purchase of a condo vs. townhouse, or if you’re ready to begin searching for your dream property, a Luxury Living Chicago Realty broker is eager and available to walk you through the process.

Let one of our experienced and licensed team members answer any questions you have and secure a property that is most suitable for your wants and needs.

Understanding Condo vs. Townhouse Resale Value

Posted on October 20, 2020March 10, 2021 by LLCR Staff

Those looking to purchase a home commonly ask, ‘Is this a good investment?’.

The Luxury Living team wants to ensure that you answer ‘yes’ to this question by understanding what makes a good investment.

We want to help you find a home that is a worthwhile investment and provide insight into condo vs. townhouse resale value.

Key Things to Know About Resale for Different Property Types

The resale value is what a buyer in the market will pay for your property. When it comes to re-selling a condo or townhouse, there a few principles to note.

In general, condos tend to sell much quicker than single-family homes, even in a down-market, due to lower costs.

It’s also critical to abide by the homeowner association’s rules and guidelines when reselling a condo. Associations may place limits on who the condo may be sold to, buyer pre-approval, and where you place for-sale signs.

Setting your home apart from the other similar surrounding condo units and communities involves highlighting your condo’s assets and neighborhood amenities. Determining a competitive selling point is crucial to the success of your resale.

The process of reselling a townhome closely mirrors that of a condo. However, sellers have found that townhomes tend to have lower resale values. Not only can it be more challenging to fill a townhome community, but it is often harder to obtain financing for townhomes. This is due to the increased liability of owning both the land and the physical structure.

On the positive side, determining a townhome’s fair selling price is relatively easy because of the many similar properties in the community.

What Impacts Resale Value

Many factors can impact the resale value of a property.

One of the best indicators of a home’s value is the sale prices of similar properties in the neighborhood that have recently sold, referred to as neighborhood comps. Real estate experts will compare these neighborhood comps to assess the value of your property.

Your property’s location is one of the key determining factors to your property’s value at the time of re-sale. This is why it’s wise to invest in an area with anticipated market growth.

Added improvements and upgrades to a property can significantly increase the resale value. Some of the projects that make the most significant difference include bathroom renovations, hardwood floors, kitchen remodel, new appliances, and added storage. All of the upgrades warrant a bump in your property’s price.

Purchasing a Property

Whether you’re moving to Chicago for the first time or are looking to move to a new home, LLCR can help.

We have a team of experienced and licensed brokers who can walk you through the home-buying process. They can help find the property that is best for you and ensure that you keep essential considerations in mind, including condo vs. townhouse resale value.

Start the hunt for your dream home today!

Condo vs. Townhouse Insurance: What to Know

Posted on October 12, 2020March 10, 2021 by LLCR Staff

House hunting comes with many considerations. Home insurance, specifically condo vs. townhouse insurance, remains a crucial area that potential buyers should be familiar with before committing to a purchase.

The Luxury Living team is here to walk you through the key differences between these types of property insurance and help you determine which property makes the most sense for you.

The Difference Between the Commonly Confused Terms

The primary distinction between condo vs. townhouse insurance comes down to the areas that a property owner is responsible for.

While townhome owners need to provide coverage for their property’s interior and exterior, condominium owners only claim responsibility for their unit’s interior. The condo’s homeowner association (HOA) covers the exterior.

Townhome insurance coverage tends to cost more than condo insurance because it is more expansive. A townhome owner has more ownership than a condo owner because they have title to the unit’s interior and exterior. This means they also have greater risk associated with their property and a need for higher coverage.

However, depending on individual insurance plans, prices may vary drastically.

Common Considerations Between Both Types of Insurance

There are several factors to keep in mind as you compare condo vs. townhouse insurance.

If you are considering purchasing a condo, the good news is that associations take some of the insurance burdens off the owners by providing partial coverage. However, condo owners still need additional protection through individual homeowners’ insurance policies.

Before determining what coverage a condo owner needs, the buyer first must examine the condo association’s policy found in the HOA’s declaration pages. Often condominium HOA insurance policies will cover the common areas and most of the building’s exterior. However, individual owners are responsible for the inside of their unit.

Individual condo insurance, known as HO-6 insurance, covers each condo unit’s interior, the condo owners’ possessions, and provides the owner with a liability policy.

Townhouse insurance, known as HO-3, generally works the same as insuring a detached single-family home. The insurance policy covers the unit as well as any outdoor space the owner has title to. This outdoor space includes the yard and any patio or balcony that the townhome may offer.

HO-3 covers fire damage and some storm damage; however, flood and earthquake insurance are optional coverage the homeowner may choose to add.

Similarly to condo associations, townhome associations cover any common space that residents have access to.

The price for townhome insurance can vary dramatically depending on which coverage the resident chooses to include in their policy.

How LLCR Can Help you Find the Right Property for your Needs

Beyond property insurance, there are still other differences between condos and townhomes that are worth investigating.

The good news is that you don’t have to navigate the waters alone. Luxury Living Chicago Realty wants to help you walk through the house-hunting process and provide you with direct support from an experienced team member.

A licensed broker can streamline the journey of finding your dream home and help you examine essential considerations, including and beyond condo vs. townhouse insurance.

What to Buy? A Condo vs. Townhouse in Chicago

Posted on October 6, 2020October 9, 2020 by Lindsay Smith

Stuck on whether to buy a condo or a townhouse in Chicago? We’ve broken down everything you need to know about condos vs. townhomes to help you better decide which route to go with when you’re ready to purchase.

Condo vs. Townhouse

There are a handful of similarities and differences in both condos and townhomes, so it’s important to understand the difference as one may suit your needs a bit more.

A condo is a privately owned individual unit within a building of other units, while a townhouse is a multi-level home that is attached to other townhomes.

Both are managed by a homeowners’ association (HOA). The HOAs set the rules for the community about standards that need to be met for some or all of the exterior and the shared property. Every resident is a member of the HOA, meaning you will be required to pay monthly or annual fees to assist in funding the maintenance and upkeep of the property.

HOA fees for condos tend to be higher, anywhere from $300-$1,000 a month depending on what services and amenities are offered at the building. Townhome fees are less expensive because the HOA is less involved in the property maintenance and townhomes normally require less maintenance in general. But, townhome owners may incur more out-of-pocket expenses because residents are responsible for both the interior and exterior space of their units, as opposed to just the interior space for condo-owners.

Both townhomes and condos are also very close in proximity to neighbors and have a bit less privacy than single-family homes. Townhomes usually have more privacy than condos because you will only have neighbors on either side of you instead of above and below you as well. But don’t worry, the proximity to neighbors doesn’t mean you’ll be able to hear everything your neighbors are saying. Thanks to party walls, which divide buildings and units into separate spaces using quality soundproofing, you won’t be disturbed.

Socializing with neighbors is easy in both condos and townhomes with the shared amenities that may include pools, parks, gyms, and communal gathering spaces. Although both usually offer a plethora of amenities, condos typically come with more than townhomes do. In condos, you will also typically share hallways, stairs, lobbies, elevators, parking lots, and other common building entries and exits with other condo-owners.

Financing a Condo vs. a Townhome

When it comes to financing, there is a bit of a difference between condos and townhomes.

Townhomes tend to be more straightforward to finance, but harder to obtain. This is because they run a lot like single-family homes that own both the land and the interior space.

Meanwhile if you own a condo, you do not own the land it sits on, but instead just a part of the interior space, making it a lot easier to finance. Typically though both the condo itself and the borrower have to go through a pre-approval process when financing.

Condo Vs. Townhome Insurance

Both condo and townhome insurance run less expensive than that of a single-family home, but there are few important differences between the two nonetheless.

If you own a townhome, you will need coverage for both the interior and exterior areas. Unlike condo owners who do not own the land around them, townhome owners will need some sort of liability protection as well in order to cover any accidents that may happen on the property.

On the other hand, condo insurance is already partially or fully provided, depending on the specifics of your HOA. The insurance covered by the HOA includes exterior and building coverage, but not your personal belongings or any incidents that may happen in your unit. Unlike townhomes, condos also do not need liability protection since they do not own the land itself.

Resale Value for Condos and Townhomes

When it comes time to sell your place, it’s important to know the average resale values of condos and townhomes.

The resale value of a condo is normally higher than those of a single family home or a townhouse because condos typically do not tend to fluctuate as much in value.

Reselling a townhome is very similar to reselling a condo, although townhomes typically don’t hold their value as well as condos. This is because it is difficult to have a full community of townhomes and there are a bit more hardships that come with financing a townhouse as well.

Now that you’re more equipped with information on both condos and townhomes, it’s time to make your decision! Get in touch with our team for any other questions you may have or to help start the hunt for your perfect place.

Month: October 2020