Having recently received an offer and signed a contract on my 1BR condo listing, the issue of condo financing has reared its ugly head. Mortgages for homes have become more accessible in the past 6 months, but if you are in the market to buy or sell a condo, you must know what you are up against.
While new, more flexible FHA rules will be implemented on December 7th in order to ease the process, there are still significant hurdles to overcome when purchasing a condominium.
- According to Investor.com “A few lenders will loan on condos and keep the loans in their own portfolios. However, experts say to get these loans buyers must have a huge down payment, as much as 40%, perfect credit and often a relationship with the lending bank.”
- 50% of the condos in the building must be owner-occupied, though with the new rules, foreclosures and bank-owned properties may be exempt from that calculation.
- No more than 10% of the condos in a building can be owned by one individual.
- No more than 15% of owners can be late on their HOA dues.
With these kind of restrictions, from an agent standpoint, I imagine it would make newer condo buildings like Bee Street Lofts and the Tides Condominiums, difficult to sell, though each are beautiful with amenities galore. Many were purchased by ‘investors’ and there are many of each still on the market – 40 and 51 respectively.
So if you are in the market to buy a condominium, while you can certainly get a great deal on price, you should have a good handle on your financing options (and a huge down payment) before even starting your search. I also highly recommend obtaining any and all information you can about the HOA and owners in a building you are considering, so you don’t get tripped up deep into the process.
If you are trying to sell a condominium, remember these restrictions when considering an offer. If someone comes in with a 90% financing requirement, it is highly likely you won’t be able to close and your condo would have lost valuable time being ‘off the market’. If someone comes in with a cash offer lower than you like, consider the opportunity cost of waiting around for that rare qualified buyer at a price you like. Just my two cents…What do ya’ll think?