Buying a townhouse may be a good option for first-time home buyers that aren’t interested in buying a condo but can’t necessarily afford a single-family home. Townhouses have shared walls so it’s essential to consider that before beginning the home-buying process.

But is buying a townhouse a good option for you? Weighing out every option and the pros and cons can help you decide.

How To Buy A Townhouse

Buying a townhome is similar to purchasing any other type of home. Townhouses are also known as townhomes. These kinds of homes share at least one or two walls with your neighboring unit. They also will typically provide outdoor space and a carport or garage.

Before you go through the buying process you will need to make sure this is the best fit for you and your family. Townhouse owners can enjoy many perks of being a home buyer and becoming part of a community.

Why A Townhouse Is A Good Option

Townhomes tend to be a great medium between owning a single-family house and owning a condominium. In 2022 the National Association of Realtors (NAR) conducted a survey that showed that townhouses were the second most popular type of home that people wanted to purchase.[1] They include certain amenities that gated communities can provide such as common areas, fitness centers, and swimming pools.

These homes can make a great addition if someone is investing in the real estate market or wants a home that is more affordable. They provide extra living space and yard space often at a much lower price than single-family homes. The HOA fees will also help you save money and time by providing you with exterior maintenance and yard upkeep.

What To Do Before You Start Buying A Townhouse

Just like when buying any type of home it’s essential to take steps to prepare. You can do this in a variety of ways. Investing in a home is a big undertaking so making sure that you have everything covered before you begin will help make the process smoother for you and the real estate agent.

Decide How Much You Can Afford

The very first thing you want to do is decide how much you can afford to pay for your new townhouse. This can include figuring out your debt-to-income ratio (DTI) before you even begin looking for a new house. Your DTI can be found by dividing your monthly debt payments by your monthly gross revenue. Experts suggest that your DTI should not exceed 43%.[2]

You will also want to make sure that you and if you’re buying a home with someone else have good job security. This can make a world of difference when it comes to paying your mortgage. This can help you decide if you can afford the townhouse you are dreaming of.

Choose The Right Location

Choosing the right location for your townhome is critical. These are most popular in cities and fast-growing suburbs where transit, jobs, shopping, and nightlife are primary aspects of the area. Even though developers are able to build townhomes in any area they are most commonly seen in these areas where there is less space for building.

When you begin searching for your new home and are getting closer to downtown areas you might mistake a row house for a townhouse. Row houses are similar to townhomes because they look similar and share a common exterior with the homes next to them. However, the ownership of these two types of homes is very different.

Learn About The Homeowners Associations

Homeowner Associations or HOA are private resident-run organizations that control a neighborhood. They are put in place to enforce rules that help keep the community’s appearance consistent with all the homes in it.

If you’re planning on buying a new home it is very important to learn about the HOA policies before you complete your purchase. Oftentimes these organizations will not allow certain aesthetic assets such as bold paint colors or even pets. There is also always an HOA fee when a home is bought in an area that is controlled by the HOA. These fees can vary by state and neighborhood but the average cost of HOA fees is more than $300 per month.[3]

Learning about the HOA before you decide to purchase a home in that area will help you make your decision if the area is right for you and if you want to live in a place that has certain rules and restrictions.

Weigh The Pros And Cons Of A Townhouse

To decide if a townhouse is best for you and your family you’ll want to make sure to weigh the pros and cons of owning this type of house. This can help shed some light on if this is the best fit for you.

Pros

• Townhouses are more affordable than detached homes.
• You will fully own the property which includes the interior and exterior of the home.
• Exterior maintenance may be covered by the HOA.
• Community facilities may be present in your townhome’s community.
• A greater sense of community with your neighbors.
• Security for a townhome’s community is usually much stronger than a single family home neighborhood.

Cons

• The HOA may be overbearing and difficult to deal with.
• Townhomes tend to have less privacy because you are so close to your neighbors.
• Shared walls can cause problems with loud neighbors.
• HOA fees may be steep depending on which type of amenities the community offers.
• There may be other fees that you have to pay such as special assessment or capital contribution fees.
• You will typically need to use a lot more stairs to get around your home.
• There is less space and square footage than with detached homes.
• There is a chance you might not be able to rent the home out.

Ask Questions About The Area

Make sure to ask your real estate agent questions about the area and community. These kinds of questions might include:

• Is there a lot of socializing present with the neighbors?
• What is the noise level of the area?
• What are the HOA fees I’ll need to pay?
• Can I rent my unit out?
• Are there any kinds of community events? What kind?
• What amenities does my HOA pay for?

When You’re Ready To Buy A Townhouse

Once you’ve decided that a townhouse is the exact type of home you are looking for, it’s time to begin the buying process. This process can be long but your real estate agent will help you every step of the way.

Improve Your Credit

Before you start the buying process for your new home you’ll want to make sure that your credit score is high enough to get a good mortgage. To secure a conventional loan you’ll need a credit score of at least 620.[4] If your score is lower than that you’ll want to start improving your credit.

Analyze The Market

Check to see how long the townhouse you are looking at has been on the market. If it has been on the market for a long period of time then you’ll have more buying power. This happens when the market runs cold and isn’t as hot as it could be.

Set An Opening Bid

After you analyze the market, it’s time to place an opening bid on the townhouse you are considering. If the market is cold, you can bid under the asking price. If the market is hot, you’ll want to give your best offer because you likely won’t be able to negotiate.

Draft A Purchase Offer & Letter Of Interest

A letter of interest can allow the seller to learn a little more about you and your family which they might consider when selling their home. A purchase offer is a legally binding document if it is accepted by the seller. Have a lawyer and your real estate agent look over both of these before you submit them.

Submit Your Offer

The next step is to submit your offer to the seller’s real estate agent. This will allow the agent and the seller to consider your offer and whether or not you will be able to buy the home.

If you are in search of a new townhouse these tips can help you get started with your search. Consider these points before you begin to search for your new home.