Condo Concerns? What To Look For
Things to consider when looking at Condos:
1. Rates are usually higher for condos if the down payment is less than 25%.
2. Concentration Rule. Does one owner own more than 10% of the units? If so, most lenders won’t finance the units.
3. Litigation. If the HOA is involved in litigation, most lenders will not finance the units unless the litigation is minor and does not involve the subject unit’s building.
4. Delinquent HOA dues. If over 15% of the units are delinquent, lenders won’t finance the units.
5. How many stories? Pricing and lending guidelines are different for high-rise condos, over 4, 8 and 10 stories, depending on lender.
6. Is the developer still in control? Most lenders disapprove of this, wanting an independent HOA.
7. Is the condo project FHA approved? Most are not, but this is necessary if the buyer is using FHA financing.
8. Is it a Condo? Sometimes properties that look like condos are actually “PUDs” or “townhomes” and not subject to Condo rules, or FHA approval.
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