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What They Don't Tell You About Condo Financing
The Importance of the Condo Certificate
The Condo Certificate is not only the most crucial document in securing a loan for a condo purchase, but it's also an upfront cost that needs to be paid before closing on the property. This certificate provides essential details about the building's financial health, insurance coverage, and compliance with lender requirements, which are vital for determining whether the condo is warrantable or non-warrantable. The warrantability status, revealed by the Condo Certificate, significantly impacts loan eligibility and terms, making it imperative to obtain and review this document early in the buying process.
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AND YES, we provide financing for Both Warrantable Condos and Financing Non-Warrantable Condos! 🤩
What is the Lender Looking at?
To make sure the Condo is Warrantable which allows Conventional, FHA, VA, and Jumbo Financing.
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Litigation Status: Ensuring that the complex is not currently involved in litigation, which could impact the financial stability of the development and your loan approval.
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HOA Financial Health: Verifying that the HOA has adequate assets and reserves to manage the property effectively, which is crucial for maintaining property values and covering unexpected expenses.
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Insurance Coverage: Checking that the complex’s insurance policy is sufficient to cover potential damages, including ensuring that your individual unit has the necessary "walls-in" coverage.
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Occupancy Ratio: Assessing the ratio of primary homeowners to renters within the complex, as a high percentage of renters may affect the warrantability of the condo and the terms of your loan.
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Special Assessments: Review for any special assessments imposed by the HOA, which are additional charges to cover large, unexpected expenses. These could indicate potential financial risks.
These factors and more make it essential to obtain an up-to-date Condo Certificate. Fees can vary depending on the HOA, but a good budget range would be $250 to $400.
FHA and VA Condo Financing:
What You Need to Know
FHA and VA loans are popular options for many homebuyers, offering lower down payments, more flexible credit requirements, and favorable terms. However, when it comes to purchasing a condo with an FHA or VA loan, there’s one crucial factor you must be aware of: the condo complex itself must be approved for the loan type you’re using.
Why Complex Approval Matters
Even if you’re pre-approved for an FHA or VA loan, you won’t be able to close on your condo purchase unless the entire complex meets the specific guidelines set by the FHA or VA. These guidelines are in place to ensure the financial stability and overall quality of the property, protecting both you as the buyer and the lender.
FHA Condo Approval
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Lower Down Payments: FHA loans typically require only a 3.5% down payment, making them accessible to many buyers.
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Credit Flexibility: With more lenient credit requirements, FHA loans are ideal for first-time homebuyers or those with less-than-perfect credit.
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Complex Requirements: The condo complex must be on the FHA’s approved list, which means it meets certain criteria regarding financial health, insurance coverage, and occupancy rates. Without this approval, you won’t be able to use your FHA loan to purchase a unit in the complex.
VA Condo Approval
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No Down Payment: VA loans often allow for zero down payment, providing a significant advantage for eligible veterans and service members.
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No Private Mortgage Insurance (PMI): VA loans don’t require PMI, potentially saving you hundreds of dollars each month.
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Complex Requirements: Like FHA loans, VA loans require that the condo complex is VA-approved. This approval ensures that the property meets the VA’s standards for safety, soundness, and marketability. If the complex isn’t VA-approved, your loan application could be denied, regardless of your personal eligibility.
ENSURE YOUR CONDO IS ELIGIBLE
Before you get under contract to purchase, it’s crucial to verify whether the condo complex is FHA or VA approved. This step can save you time, money, and frustration by ensuring that your loan type can be used to purchase the property. If the complex isn’t approved, I can help you explore other financing options or guide you through the process of seeking approval if it’s possible.
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VA Condo Eligibility: https://eauth.va.gov/lgyhub/WebLGY/admin/condo/CondoSearch.jsp
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FHA Condo Eligibility: https://entp.hud.gov/idapp/html/condlook.cfm
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Contact me if you want help with checking Eligibility.
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Contact me if you want help seeking approval if it's possible.
Your Condo Loan Could Be Fully Funded 30 Days From Now
Fixed or (ARM) Rates
VA Complex
Qualifing
Non Warrantable
FHA, VA, CONV
& Non-QM
Investment & STR Financing
