When purchasing a home one of the first questions to answer is what type of property you do want to purchase. There are a host of different types of residential properties and each type has its pros and cons. Below we will list out some of the different types of properties.
This is the type of property that most people picture when starting their home search. A single-family home is a standalone structure that is typically designed to accommodate one family. This dwelling type typically has a yard, driveway, and outdoor space. The main benefit of this property is that it typically provides more privacy and the main drawback is that it requires a lot of maintenance. Since it is so common, this is one of the easiest types of properties to finance.
This type of property has multiple different units – this can be a duplex, triplex, or 4-plex. This structure is designed for multiple different individuals or families to live in at the same time. One of the main benefits of owning a multi-unit property is that you can rent out the other units to offset ownership costs, however, a drawback is that it can be challenging to maintain and you are now dealing with the nuances of managing tenants.
Condominiums differ from single-family residences in that typically when buying a condo you do not own the building itself but rather only the inside. This type of building is typically within a larger complex that has shared amenities and is maintained by a general Homeowners Association (HOA). This is often considered a great starter home as some of the responsibility is shared by the HOA. A challenge with financing condominiums is obtaining all the necessary documentation from the HOA to ensure that there are no financial issues with the management of the HOA. Another downside with condos is they often do not appreciate in value as quickly as single-family homes.
Townhomes are typically multi-story units with conjoining walls. Oftentimes, they have a very small yard or patio and are also typically part of a HOA. For the most part, these properties often share all of the same benefits and drawbacks of condominium ownership and are also relatively easy to finance.
Manufactured homes differ from traditional housing in how the property is constructed. Typically these homes are built in a factory and are eventually transported to a permanent location where they are affixed to the ground. While some manufactured and modular homes look just as good as stick-built homes they typically do not appreciate in value as much as traditional homes. They are also subject to additional underwriting scrutiny and higher interest rates when it comes to mortgage financing. It is important to talk to your lender in advance if this is the type of property you are seeking.
Other Property Types
Some other property types include co-operatives, mobile homes, retirement community homes, and historic homes. For the most part, all of these types of properties require specific financing which is normally not covered through traditional residential financing. Occasionally you will be able to make a historic home or retirement community property work but that comes down to specifics about the property.
Regardless of which type of property you decide is correct for you, make sure you let your mortgage lender know right away. Mortgage financing is slightly different on all different types of properties and the sooner that your lender is aware of which property you are after the sooner they can provide you with a more accurate quote. If you have any questions please feel free to give us a call.