When it comes to buying a property, the buyer must decide whether they want to purchase a house, an apartment, or a walk-up. Each option has its advantages and disadvantages, but the buyer should look for what best suits their needs, taking into consideration criteria such as size, price, convenience, security, and location, among others.
There are also significant differences in the type of mortgage product that can be obtained, whether buying a house or an apartment. Here we explain the differences.
Important elements for the purchase of an apartment or walk-up:
- To determine if an apartment qualifies for low-interest mortgage products such as FHA, Veterans, and Fannie Mae loans, a condominium assessment must be conducted. For the condominium to qualify for FHA loans, it must be certified with HUD, and it is important for the Board of Residents or Condominiums to maintain that certification up to date, so that buyers can benefit from this type of loan.
To make the evaluation of the condominium, the Board of Residents or Condominiums is requested to complete a qualification questionnaire. This questionnaire evaluates the financial condition of the condominium and the insurance policies, among other things. Some of the questions included in this questionnaire are about the number of delinquent apartments, if there are any lawsuits against the condominium, how much money is reserved annually for structural or aesthetic improvements, if there are any leaks, the insurance policies held by the condominium, the most common use of the condominium (condo-hotel, primary residence, rental), and the condominium’s operating budget.
If the condominium does not meet the qualification criteria, the buyer, in some cases, may opt for a conventional loan. This will depend on the reason(s) why the property did not qualify. This type of loan often has higher interest rates, and the buyer will also have to cover approximately 20% of the property price and closing costs from their own funds. - In every condominium, maintenance fees are paid. This maintenance payment is made to cover expenses for facilities and common areas such as electricity, water, cleaning and maintenance, security, insurance policies, pest control, and gardening, among others. This payment is in addition to the mortgage payment.
Important elements for buying a house:
- When buying a house, the evaluation and documentation required to obtain FHA, VA, or Fannie Mae loans are not the same as those for an apartment or walk-up, although the property must meet certain conditions, which will be assessed during the appraisal.
- In addition to the property appraisal, which is also conducted for an apartment or walk-up, a surveyor is required to create a plot plan for the purchase and sale of a house. This plot plan is used to certify the measurements and boundaries of the land, ensuring that the value assigned to the property is accurate. One of the things evaluated is whether the property has incurred any encroachments from neighboring properties or vice versa, or if any neighboring property has invaded the property being sold.
This surveyor requirement applies to all houses, even if they are newly constructed.
The process of selecting a property, whether it is a house or an apartment, is unique. To guide you through the property selection process, we urge you to seek advice from a professional in this industry, a real estate broker.
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