You’re ready to buy your luxury condo, but first your loan needs to get in order. Is there anything special to know when financing a condo? The answer is yes.
A condo is a different type of purchase than a single family home. Lenders assess the value differently and it pays to work with a lender who is competent with condo loans. With a condo you own a unit within a larger building or community of other condo owners. You jointly own the exterior property and common areas with all owners. When you buy a condo you are purchasing a percentage of a total project.
Most importantly, your creditworthiness will be evaluated as well as the physical condition and fiscal health of the entire development where you want to buy. Since you are buying into an complex the financial health of the complex will be assessed.
In addition to these factors, the condo association has to qualify in order for your mortgage to be approved.
While the loans are the same, the lending process is different from purchasing a single-family home. Down payments are still configured the same, but the property analysis is where the primary difference occurs. The entire condo project is analyzed as well as the unit being purchased
Lenders and buyers both should evaluate the financial and governance strength of the condo community. Your Realtor can provide you with HOA minutes, budgets and bank statements to assess the health of your condo community.
Lenders also examine whether or not the building has any pending litigations or special assessments in process that could affect financing for future sale.
HOA fees will be paid monthly to the HOA directly. These payments are not usually part of the buyer’s scheduled mortgage payment. Buyers should evaluate what is included in the monthly fee such as utilities, cable, parking or insurance.
Some lenders are more ‘condo savy’ than others and it pays to work with a lender who is.
Contact me today for lender referrals and guidance on buying your Sun Valley Condo!
- Kirsten DeHart
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