Is buying a condo right for you? Condominiums, or condos, can be great alternatives to detached homes. City dwellers, singles, couples, seniors, and many others may find condos that suit their needs and budgets. Others may simply prefer low-maintenance living. Buyers who feel “priced out” of homes may discover condos offer an affordable homeownership alternative. For some buyers, a condo is a place to live for a few years. For others, a condo can be home sweet home for a lifetime.
Just what is a condominium?
You may have a basic understanding of what a condo is: you own your “unit” within a larger building or community of other condo owners. You jointly own the exterior property and common areas with all unit owners in the building or community.
Each owner has a separate mortgage for his or her unit and is responsible for making the payments on the loan and paying associated real estate taxes.
Condo owners pay a monthly “condo fee” that covers general repairs and maintenance to the building exteriors and common areas managed by the Condo’s Homeowner’s Association.
Each unit owner has title to his or her individual unit, an individual interest in the project’s common areas, and, in some cases, the exclusive use of certain limited common areas.
Although getting a mortgage loan to purchase a condo is similar to purchasing a detached home, there are some important differences.
What are Warrantable and Non-Warrantable condos?
Warrantable condo projects are projects that meet all the federal guidelines pertaining to the entire project. These guidelines address the Homeowner’s Association, By-laws, Budget, and Master Insurance policy of the condo project.
Non-Warrantable condos are projects that do not meet all the federal guidelines.
How are condo loans different than regular home loans?
Condominium loans are a little different than single family home mortgage loans because
not only does the condo unit buyer need to qualify for the mortgage but the condominium
project also needs to qualify.
The condo project must meet federal lending guidelines and standards & the buyer must qualify using the HOA dues factored in the financing options are the same as a standard single family home
If you have any questions, contact your local mortgage lender today!
To be classified as a Warrantable condo, 51% or more of the condo owners need to live in the condo complex.