Getting a condo is a better alternative to a traditional home for a certain set of people. Those wanting to live closer to urban conveniences will prefer a condo more than a house which will most likely be located in the suburbs. First-time buyers may also prefer the lower price tags of condos over single-family homes. Add to that the stylish amenities in a condo package like a swimming pool and fitness centers. You can surely find the best features a Minneapolis condo can provide among Wayzata condos for sale.
The biggest perk of all? A low-maintenance lifestyle. You can leave all of the building maintenance to the building management, as well as repairs of some interior fixtures. As long as you’re paying your homeowners’ association fees promptly, you have nothing to worry about.
Then again, if you’re set on getting a condo via a mortgage, know that the process is not like that of a standard home. Here are some of the things that you should be aware of.
More Stringent Underwriting Requirements
There are two things underwriters look into if you’re getting a home mortgage from a bank: your capacity to pay and the condition of the property you’re buying. But for a condo loan, more factors go under scrutiny:
- The soundness of the condo HOA’s finances
- Legal condo papers
- The number of condo units already occupied
If the underwriters smell a mere whiff of anything awry with any of the above-mentioned factors, then consider your condo loan a no-go.
Higher Risk, Higher Rates
Sometimes, even if a particular condo has achieved the requirements above successfully on top of the usual mortgage requirements, this is still not an assurance that a lender will approve a mortgage. Some will be more stringent than others just to assure that their loaned money returns.
Moreover, since most mortgage lenders consider condos as a higher risk than single-family homes, you can expect that rates for the former will be much higher. Your rates may be lowered if you pay some of the lending fees upfronts, but again, this will depend on the lender you approach.
Condo Loans via FHA and Fannie Mae
If you want the highest chances of being approved, your best bet is to look into condo loans secured via the Federal Housing Association (FHA) or the Federal National Mortgage Association (Fannie Mae). You will need at least 3.5% down payment and fair to good credit to apply. Plus, you need to have a relatively low debt-to-income ratio for these loans.
Still, there are certain rules to follow if you want your FHA or Fannie Mae condo loan granted. Most crucial among these rules is that the condo you’re eyeing must be approved by the FHA.
These are among the standards followed by FHA-approved condos:
* Occupancy should be at least for half of all units.
* Tenants with late association dues should not exceed 15% of the total number of tenants.
* Only 30% of all tenants at most have similarly taken advantage of FHA loans.
Find a Specialized Buyer’s Agent
With the specialized requirements for getting a condo loan, you will need the help of a buyer’s agent who has experience dealing with conditions like this. In Minneapolis, that would be me, Adam Fonda. Give me a call at 612.308.5008 or send me an email at firstname.lastname@example.org – let’s get you that condo of your dreams!