Buying a townhouse

Quick insights

• Townhouses offer a balance between the community of condominiums and the space of single-family homes, making them an appealing choice for many buyers.
• Key steps can include budgeting for HOA fees, thoroughly inspecting properties and asking the right questions about the neighborhood.
• Consider aspects like shared walls, HOA regulations, community amenities and the convenience of low-maintenance living to decide if a townhouse aligns with your needs and long-term goals.

Imagine waking up in a space that blends privacy and community without the specific maintenance of owning a detached home. Buying a townhouse is step toward homeownership for many. Whether you’re a first-time homebuyer, investing or looking to downsize, a townhouse can be your ticket to achieving your dream.

What is a townhouse?

A townhouse is a multi-floor home that shares one or two walls with neighboring properties but has its own entrance and outdoor space. Unlike owning a condo, where residents share ownership of the building, owning a townhouse often includes the interior and exterior of their property. Townhouses are popular in both urban and suburban areas.

Key features of a townhouse:

• Shared walls: Usually attached to other homes on one or both sides.
• Multiple stories: Often designed with two or more levels to maximize living space.
• Private entry: Your own front door and sometimes a yard, patio or both.
• HOA fees: Many townhouses are part of a homeowner’s association, which may handle exterior maintenance or communal spaces.
• Urban/suburban appeal: Common within city neighborhoods or suburbs with city-like amenities or community features.

Tips for buying a townhouse

Buying a townhouse can be an exciting journey but requires careful planning and understanding of the process. Here’s a general overview to help you navigate:

Secure financing:

• Get prequalifiedec-mortgage-prequalification and preapprovedaffordability_hl000008 for a mortgage based on your budget to know how much you can afford. Please note that Chase does not offer mortgage prequalification, only mortgage preapproval for prospective homebuyers.
• Compare rates and terms from different lenders to find the best deal.
• Work with a Home Lending Advisor to explore financing options and understand your loan terms.
• Federal Housing Administration (FHA), Veterans Affairs (VA) and conventional loans are potential options for townhouse buyers. Ensure your lender knows the property you want to buy is a townhouse, not a condo, as this can affect loan terms.

Find a real estate agent:

• Choose an agent experienced in townhouses to guide you through the buying process.
• They’d help you find properties that meet your needs and negotiate on your behalf.

What to look for in a townhouse:

• Make a list of your individual priorities, such as location, amenities and size.
• Attend open houses or schedule viewings to explore your options.
• Check for structural integrity and potential maintenance issues during a home inspection.
• Look at the layout and ensure it fits your lifestyle (number of bedrooms, storage space, outdoor areas).
• Assess soundproofing because shared walls could mean more noise depending on how they’re built.
• Pay attention to natural light, parking availability and access to amenities.
• Include HOA fees in your monthly housing expenses to avoid surprises. Depending on the location and amenities, these can range up to $500 per month or more. HOA fees typically include exterior maintenance, landscaping and shared amenities.

Questions to ask during the buying process:

• What are the HOA fees, and what do they cover?
• Are there any restrictions on exterior changes, pets or rentals?
• What’s the condition of shared facilities like pools or clubhouses?
• Has the HOA been involved in any disputes or lawsuits?

Make an offer:

• Once you find a townhouse you love, your agent should help you make a competitive offer.
• Be prepared to potentially negotiate terms like price, contingencies and closing costs. Consider asking for repairs, closing cost assistance or a price reduction if issues arise during the inspection.
• If competition is high, consider writing a personalized letter or waive minor contingencies (but only if you’re comfortable).

Commission the inspection and appraisal:

• Hiring a professional home inspector can help you identify potential issues.
• Your lender will arrange an appraisal to confirm the home’s value matches the offer.

Close the deal:

• Finalize the paperwork, secure homeowners insurance and pay closing costs.
• Include loan origination fees, title insurance, property taxes and HOA transfer fees.
• Ensure any shared property disputes are resolved and confirm HOA obligations.
• Once the deal is closed, you’ll receive the keys to your new home!

The pros and cons of buying a townhouse

Purchasing a townhouse can be the right option for many, but it’s important to weigh the benefits and drawbacks to decide if it’s the right choice for you.

Pros of buying a townhouse

• Lower maintenance: Townhouses often come with HOA fees to cover services that handle exterior upkeep, like landscaping and snow removal, saving you time and effort.
• Community amenities: Many townhouse communities offer perks like pools, gyms, parks or shared clubhouses.
• Affordable price point: Townhouses are typically more affordable than single-family homes in the same area for various reasons. The price point can make buying a townhouse accessible to first-time homebuyers.
• Convenient location: Townhouses are often situated in urban or suburban neighborhoods, close to shopping, dining and transportation.
• Sense of community: Living close to neighbors fosters a stronger community vibe, which can be great for families or people who enjoy socialization.

Cons of buying a townhouse

• Less privacy: Shared walls mean you might hear your neighbors, and your outdoor spaces may feel less secluded.
• HOA fees: These can make up a significant part of your budget, depending on the community’s amenities and maintenance responsibilities.
• Limited control: HOA rules may restrict your ability to customize the exterior of your townhouse or make landscaping changes.
• Potential resale challenges: If the community becomes less desirable or has high fees, reselling your townhouse could be more difficult.

Should you buy a townhouse?

Deciding whether to buy a townhouse depends on your individual needs, lifestyle and long-term plans. Townhouses can offer affordability, low maintenance and a sense of community, but also might not fit everyone’s preferences.

Evaluating your needs and priorities

• Budget: Can you comfortably afford a townhouse, including the purchase price, HOA fees and maintenance costs?
• Lifestyle: Do you value low maintenance and shared amenities over having a large, private yard? Are you okay with less privacy due to shared walls?
• Location: Is the townhouse in a neighborhood that suits your commute, family needs or social life?
• Long-term plans: Are you planning to stay in the home for at least 3-5 years, or are you looking for a short-term solution?
• Alternatives: Would a condo, single-family home or renting better suit your lifestyle or financial situation?

Making a lifestyle decision to buy a townhouse: Real scenarios

When deciding if a townhouse is worth it, carefully evaluate your priorities and research the community to ensure it aligns with your needs and goals. Here are some examples:

• The young professional: Townhouses can be more affordable than single-family homes. A 28-year-old first-time homebuyer chose a townhouse in a suburban area for its affordability and proximity to work. The included gym and pool saved on fitness costs, and HOA-managed maintenance allowed more free time to focus on their career.
• The downsizer: Buyers looking to simplify their lifestyle may choose a townhouse for its manageable size and lower upkeep. A retired couple sold their large family home and moved into a townhouse. They enjoyed the community and low upkeep but found the lack of customization frustrating.
• The investor: Townhouses can be investment properties, offering rental income with lower maintenance than standalone homes. A real estate investor bought a townhouse in a popular area and rented it out to tenants. While the investor enjoyed steady rental income, rising HOA fees ate into their profit margin over time.

In summary

Purchasing a townhouse offers many benefits, such as reduced maintenance and community; however, factors like HOA fees, privacy and future goals are important to consider. Take the time to understand your priorities, research financing options and consult with experts to navigate the process with confidence. When you’re ready to move forward, reach out to a Home Lending Advisor to explore your options and begin your homeownership journey.