If you’re looking to purchase a new home, which costs less – a house or a condo? You may be surprised by the answer.

The Monthly Payment

Most people, especially first or second time homeowners worry about the monthly payment on their new home. What many don’t think about right away is the monthly home owners association (HOA) fees.

When you purchase a house, rarely are there HOA fees involved. However, with a condo, almost every time a HOA fee is involved. Sometimes the fees are virtually nothing, but mostly they can be a bit expensive. HOA fees of $300 per month can be routine.

But – what if you didn’t have to pay $300 per month? How would your monthly payment be affected?

What Are the Numbers?

If you purchase a condo for $250,000 or a home for $250,000, the mortgage payment will be the same. But there will be two differences. First, the taxes will probably be different, which means the monthly payment will be less. And secondly, you won’t be paying the $300,000 HOA fee.

But Let’s Look Deeper

Most of the time, if you spend the same amount for a condo or a house, the condo will be a nicer home. But what happens if you spend more for a house? Let’s say you spend $300,00 for a house. Since you won’t be paying the HOA fee, you may end up paying less per month for your mortgage. Additionally, the HOA fees are no tax deductible while the mortgage interest is.

Here are the numbers. At today’s interest rates of 3.5%, an extra $67,000 on the mortgage equals an increase in the monthly mortgage payment of $300.86.

Other Variable

In a condo, typically the HOA fees include exterior maintenance of the building, snow removal, grass cutting, garbage removal, and sometimes, use of a pool. A single family home doesn’t get that for free. And those services are what the HOA fee is for. So if those things are important for you, maybe a condo is what you should buy. But if you like cutting grass and shoveling snow, then may a house is in your future.

Bottom Line

There is no single  answer for everyone. Finding which costs less, a condo or a house may help you make your own decision as to whether a condo or a house is right for you. Either way, when you’re ready to look for a home, call us because we can help. Call Bunny and Art Reiman – Realtors.

 

Would you like to search for homes or condos in other Monmouth County towns?