People looking to buy condos often ask themselves, “How much can I afford?” The first thing they look at is price. While that is a key factor, assessments and taxes combine with price to determine how much the monthly payment will be. Sometimes a lower priced unit will have a higher monthly payment than a much higher priced unit.
MORTGAGE + ASSESSMENT + TAXES = WHAT YOU CAN AFFORD
Here is a real life example of three condos. One was priced at $339,800, a second at $349,900, and a third at $500,000. Someone might quickly jump to the conclusion that the lowest priced unit would have the lowest monthly payment. Not true. Assuming each unit was bought with 20% down, the second highest in price had the lowest monthly cost ($2,118), the highest priced unit had the middle monthly cost ($2,304), and the lowest priced unit was the most expensive monthly cost ($2,421).
What happened? Total monthly costs were skewed by the assessments and taxes. Condo 1 had the highest taxes ($7,056) and assessments ($536). Condo 2 had in between taxes ($5,247) and assessments ($345). Condo 3 had the lowest taxes ($3,082) and assessments ($137) . The taxes and assessments greatly influenced the end monthly payment.
This example illustrates the importance of comparing taxes and assessments – and not just price – when shopping for condos.
| Monthly Cost (assuming 20% down payment) |
Condo 1: $339,800 | Condo 2: $349,900 | Condo 3: $500,000 |
|
Mortgage payment |
$1,297 |
$1,336 |
$1,910 |
|
Taxes |
$588 |
$437 |
$257 |
|
Assessment |
$536 |
$345 |
$137 |
|
Total Monthly Cost |
$2,421 |
$2,118 |
$2,304 |
