Financing a Condo? 6 things you must know

Condo, find out ALL about the building first!

This the second of two videos on the topic of buying a condo, here I will cover the building’s aspects most lender look at to approve the loan. If it a lender’s concern, they are equally important for you as a buyer.

Getting a mortgage on a property deeded as a condo is more challenging than financing a single family home. When you buy a condo you are responsible for everything inside your unit and the association is responsible and maintains the common elements. Be aware that some Town Homes are deeded as Condos ( and some as single family homes).

If you are financing, the lender will want to see the building’s financial information, to determine if the building meets the requirements for the type loan you are requesting. Lenders not only qualify the buyer, and the value of the asset used as collateral, they have specific rules to approve a building. Depending on the program and the percentage to be financed, the guidelines vary.

You don’t want to go thought the whole process, to find out after you have spent time and money, that your loan will not be approved, because the building doesn’t qualify. Why would do that if you can avoid it?

Are you aware of how strict is the financing of condo units?

These a 6 things to take into consideration:

1.- Does the Building have Reserves?

This is a very important questions to ask ,even if you are paying CASH for the property. For example… there is major repair needed and there are not reserves… what happens?

If an special assessment is needed, either it is collected and the work is done OR, the building starts to deteriorate and depreciate due to lack of maintenance.

1.- 2.- Is there any Litigation?

Most lenders are very strict with this issue… if you decide to get in a condo that has a litigation in progress.

Do your due diligence and find out what happened and the  implications it may have in the future.

3    3.- Investor Concentration?

This refers to the number of owners in the project who are investors. Some lending programs have limitations regarding the percentage of units that can belong to investors in general and to a single investor. A high investor concentration can be a problem for an FHA loan or a loan program when the purchaser is an investor.

Homeowners tend to take better care of the building than tenants who will be there for just a short period of time.

4.    4.- Are there Late accounts?

The healthiness of the condominium finances are key for the lenders, they have a max number of units that can be late in HOA fees payments.

If your neighbors don’t pay their HOA dues, it will affect everyone.

5.      5.-   Condo Questionnaire turnaround time?

Some others will require a Condo Questionnaire which is  not requested by the lender on financing with higher down payments. On Cash transactions it would have to be required by the buyer directly if .

The condo questionnaire answers all of the previous questions, ask the title company to request it on day one, and confirm that the building qualifies before you spend in the inspection.

6.       6.- Building Insurance Coverage

The bank reviews and approves the master insurance policy, what is and the amounts being covered. It covers the building structure but it doesn’t cover the interior of the unit or personal property. In additional the lender will require HO6 Insurance. It is also known as “walls in insurance”, it cover the interior of the unit, personal property and owner’s liability.

One of my customers, that owns a condo located in a third floor, had a pipe burst that damaged her kitchen cabinets, several walls and the kitchen flooring also causing damage to the unit below; it was covered by her HO6 insurance!  … The total bill was thirty five thousand dollars 35,000. She was very grateful that she had it!

 it! It is recommended to always carry it. It also covers liability.

Low building’s reserves, litigations, a high investor concentration, late accounts and poor condo insurance may affect the ability to obtain financing on a condo and may represent you potential issues and financial surprises that you want to avoid.

Lots of details, right???

Do your homework and make an informed decision!

Please let me know if you have any questions!

Ines Garcia PA

Miami-INES GARCIA

HER PROMISE

Working with Inés is not only about her experience, is not only about how much she cares…  it is also about passion to keep learning every day in an ever-changing industry; all this along with communication which is key and the cornerstone of every relationship.

A long time South Florida resident with a deep knowledge of the different lifestyles you can enjoy in Miami-The Capital of the Americas.

 

Positive Impact:
Her goal is to positively impact the people around her transforming the experience when buying and selling real estate in a relationship based on education and enjoyment.

Trust:
What you see is what you get… transparent relationships and a lot of communication.

Congruence:
She follows her heart and her customer’s needs and interests lead the relationship.

The REAL Customer Experience:
She applies her knowledge and experience to simplify the complexities of the real estate process for you. 

HER STORY

Born and raised in Venezuela, Ines moved to Miami in the year 2000. She owned a Real Estate Office in Venezuela for the largest network there, for 5 years prior to her moving to the USA.

Having lived in Broward and Dade, and selling in several areas, provides her broad perspective of the South Florida Real Estate Market. Currently a Downtown Coral Gables resident who enjoys everything about the city… especially the ability to walk to restaurants, the super market and around the Granada Golf Course.
 

Ines has an architecture degree from the Universidad del Zulia in Venezuela and holds an MBA from the University of Miami. Her background provides a strong foundation to share insights that help her customers make informed Real Estate decisions.

Currently a Real estate Advisor with KW Legacy. During her Real Estate career, Ines has worked both in sales and management, being the managing broker for several years with one of the largest companies in South Florida.

Previously participated in the Miami Association of Realtors as a member of the Grievance Committee, and prior to that, served on the Professional Standards Committee at the Fort Lauderdale Association of Realtors.

Ines actively participates in “Fundación Mayacuchas”, that helps organizations in Venezuela providing food and medicines along with used clothing that is distributed among the people who need it most.