The first thing you need to decide on is what type of property you want – and you have some options to choose from. First up: co-ops and condos. While both are technically apartments, there are some important differences between the two.
When you purchase a co-op, you’re buying shares in a corporation that owns the residential building. As a shareholder, you receive a proprietary lease to an apartment. When you purchase a condo, on the other hand, you own real property: an apartment, plus a percentage of the building’s common areas. In both cases, you pay monthly fees to cover the building’s upkeep – but in a co-op, the monthly fee can also include payments for the building’s underlying mortgage and property taxes.
Next, you have single-family homes. These are detached, free-standing homes occupied by one family. They provide owners with the most privacy, space, and freedom compared to other home types, but often involve higher maintenance costs.
Then you have townhouses. These are multi-floor homes that may share one to two walls with the adjacent properties, but each one has its own entrance. Compared to single-family homes, townhouses are generally more affordable – but they offer less space and privacy. Compared to an apartment, though, they have more of both.
As well as property type, there are other important considerations to make when choosing a home. These include location, condition (new-build vs. “fixer-upper”), and occupancy type – that is, whether you’re buying the home as a primary residence, secondary residence, or investment property. Your occupancy type may impact down payment requirements and the cost of the loan.