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The purchase of a home is possibly the most important decision many of us ever make. The first one is even more challenging since we have no experience with the process, which can appear to be confusing, even mysterious. Equally daunting can be the decision on the type of property to purchase: a condominium, a multi-family house, or a single family home. There are pros and cons to each option for a first time home buyer.
Condominiums are excellent first time choices since they can be less expensive than detached housing, while often providing many wonderful amenities (swimming pools, tennis courts, bike trails, open space, etc.). You will have a monthly condominium fee (homeowner's dues) that will cover much of your property insurance requirements and other charges, possibly water, sewer, cable TV, landscaping, etc., alleviating another set of concerns for the first time buyer. A potential downside surrounds the reliance on the homeowners' board of directors charged with managing the affairs of the entire condominium project. If they are diligent, your project will run efficiently. If they are lackadaisical and inattentive, problems may occur. Verify that any condo project you're considering is well managed.
Multi-family houses can also be wise choices for rookie homeowners. First, the obvious advantage of receiving income from the one to three units you will have, effectively lower your mortgage payment each month. This feature alone can make it a wonderful choice for the first time buyer. A second potential advantage may come when you are ready for your second home, you might elect to keep your multi-family as an investment property. If you have built up sufficient equity, you can use a second mortgage to pull out the cash you need to put down on your new home. The potential downside: With no home ownership experience, you must also become a landlord, not an easy task for the feint of heart. But multi-family home ownership remains a potentially excellent choice for a first property.
Single family homes (SFH) are always wonderful choices for first homes for a number of reasons. A new owner will experience all of the good, the bad, and the ugly related to home ownership rather quickly, providing the knowledge he/she will need for years to come. Fair market values (FMV) tend to increase faster and higher with SFH than with most condominiums or multi-family homes. Neighborhoods of SFH are perceived to generate a higher quality of life than mixed, multi-family or condo areas. Whether it is true or not, this perception can help the home owner when it's sell time.
Mortgages of all flavors are available to first time home buyers regardless of which property type they choose for their first residence. Sometimes condo homes may require a small interest rate premium but there is little difference in terms available for any of these property types.