Condo Loans and Condo Financing – Tougher to Get?
A condo loan requires both the buyer and the condo association to qualify. Even a highly qualified buyer may not be able to purchase a condo, if the condo development is not as financially stable as a lender requires.
Some Austin Condos Won’t Qualify
Austin has a lot of condos, including older developments and newer ones dotting the downtown skyline. In August of 2010, the Austin Business Journal reported on the failure of the Pecan Place Condominiums near 183 and Texas 45 in Northwest Austin. Half of the 29 townhouse condos had sold but the remaining ones were in various states of completion. Other developments have also made the news, in different stages of failure or distress.
In situations like those, even if a borrower had really really wanted to buy one of the condos, condo financing would have been impossible to obtain – the financial health of the developments was not ok.
Other condo developments, of course, are doing just fine. Make sure you know which is which when you go shopping for a condo so your condo mortgage will be less likely to stall the deal. FHA loans for condos are also different from regular home loans, or non-FHA condo mortgages.
Work with an Experienced Lender for Your Condo Mortgage
Because a condominium loan is more complicated, make sure that both you real estate agent and your mortgage broker or bank are experienced in the ins and outs of condo financing.
Qualify real estate agent and mortgage professional by asking questions like these (and take notes!):
1. How many years have you been in this business?
2. How many condos have you sold? (Or, how many condo loans have you done?)
3. Are you familiar with this particular development? What can you tell me that you think I need to know?
4. Can you describe the condo financing and condo buying process and how it is different than the home buying process?
5. How will you make sure we have good communication about my purchase?
6. How many units are rentals and how many are owner-occupied? Does that make a difference in whether or not I can get a condo loan?
7. What are the fees in addition to my condo mortgage payments that I will have to pay (upfront fees, on-going or monthly fees)?
8. If you don’t understand any of the answers, ask them to explain their answers and keep asking questions until you’re sure you understand!