7 Things Every Condo Buyer Should Know
The Condo Buyer's Guide: Crucial Insights for Your Purchase
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Are you dreaming of home ownership but think it’s out of reach? Have you been shopping around for a place to call your own, only to find the prices too high or the competition too tough?
Well, before giving up on the dream just yet, why not consider condominiums as an option? Condos are increasingly popular with those in need of their own space and they offer a lot of advantages.
In this blog post, we will discuss what condos can offer that other dwellings cannot and why they make such an excellent choice for anyone wanting their very own slice of the American Dream!
#1 What is a Condo and Why Consider Buying One?
#2 What are The Disadvantages for Condo Owners?
While there are advantages of owning a condo, such as lower costs and easy access to amenities, it also has its drawbacks. For instance, condos tend to lack the privacy or living space that single-family homes offer; you may even be subjected to noise from other units if your neighbors aren’t considerate. Additionally, many condos have rules in place that can limit what you can do with the property.
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#3 What is The Condo Association and What Does It Do?
All condo unit owners are automatically part of their association. The condo board is a team made up of elected members who manage and enforce all regulations within the complex, maintain common areas to standard, insure the association abides by state and federal laws, and collect fees from residents to cover upkeep costs as well as other necessities for running the association effectively.
#4 What is a HOPA Condo Vs Non-HOPA Condo?
#5 What's The Condo Buying Process?
Financing A Condo
Financing your dream condo is one of the most important steps in the home-buying process, so it’s critical to find a lender and loan program that best meets your needs. When assessing various options, you may discover different rates, terms, and down payment requirements. Let’s take a look a some of the options you may find.
The conventional mortgage is the most popular loan for condo purchases and may require a minimum down payment of as little as 3%.
Other loan types are the VA Loan and the FHA Loan. VA (Veteran’s Administration) loans are available to veterans and can be as little as a 0% down payment, while FHA (Federal Housing Administration) loans are government-backed mortgages that can be used for Condo purchases with 3.5%. Because of the stringent requirements, both loans have for condos many condos don’t qualify in South Florida.
Get the information you need to make an informed decision on your mortgage by visiting our mortgage page.
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Understanding Warrantable Vs. Non-Warrantable Condos
Warrantable Condos are those that meet underwriting requirements set by Fannie Mae and Freddie Mac. Condos labeled as non-warrantable don’t meet the guidelines, usually because of a variety of factors such as reserve funding, high delinquency rates, or the number of units being rented out at any given time.
When deciding whether to finance a condo, lenders typically assess the risk associated with it. Condos deemed as low-risk, or “warrantable,” usually come with more competitive mortgage rates and require smaller down payments – alternatively, non-warrantable condos can prove more difficult for financing with higher interest charges and larger down payment requirements.
While warrantable condos that are FHA approved can be as little as 3.5%, the vast majority of non-warrantable condos will require a 20-25% downpayment or more. It’s important to speak with your loan officer to prepare.
Closing Cost
When purchasing a Condo, the buyer will be responsible for closing costs. These costs can range from 2-5% of the purchase price and include fees such as appraisal, title search, property taxes, and insurance escrow.
Application Process
Condo Requirements
When considering Condo purchases, it’s important to familiarize yourself with the Condo requirements.
Before committing to a Condo purchase, you must be aware of and comply with the association’s regulations. Noise level limits, pet policies, or rental requirements may be imposed– understanding these ahead of time is key for an informed decision-making process.
Becoming a condo owner may involve meeting certain financial qualifications. Many associations require applicants to possess a specific credit score and income level, while others may mandate an earnest money deposit percentage.
Sidebar, It’s important to remember that earnest money and down payment are not the same. Earnest money is a buyer-provided deposit demonstrating their commitment to purchase property, while a down payment represents how much capital you must put towards your loan for the lender to accept it.
#6 Monthly Condo Fees
When considering Condo purchases, it’s important to understand the monthly fees associated with ownership. Condo owners must typically pay a set amount each month which covers common expenses such as landscaping, exterior maintenance, insurance, and more. Condo fees may vary and may be increased by an annual vote of the Condominium board.
Understanding Reserve Funds
Before investing in a condo, buyers should understand the association’s reserve funds. These reserves are generally intended for significant repairs or refurbishments of the condo such as roof repair/replacement, pool resurfacing, and building renovation.
As a rule, lenders typically view associations more favorably if they have at least 10% of their overall budget in emergency reserves.
Special Assessments
If a Condominium does not have enough reserve funds in place to cover emergency repairs, chances are the association will require owners to contribute additional funds. These additional funds are called a special assessment.
The Condo board votes to approve assessments and all owners are held accountable for their share of the cost. The assessment is typically paid off over a set time. If the assessment remains unpaid by the unit owner, legal action may be taken including foreclosure. Therefore, it’s essential that each owner be aware of and pays the assessment to avoid any potential repercussions.
Florida Condo Insurance
In the state of Florida, real estate insurance is undoubtedly an essential consideration and takes on even greater significance when dealing with condominiums. Property coverage in this region has become a fundamental requirement and it is at a premium.
Walls-In Condo Insurance is an essential safeguard for condo owners, shielding them from potential legal claims stemming from their unit and safeguarding their personal belongings.
Moreover, Condo associations should have separate insurance that offers protection for the common areas and any legal liabilities of the association.
#7 Knowledge is Power
Investing in a condominium in South Florida is an attractive option for any aspiring homeowner. However, before making the purchase it’s essential to understand what you are getting. Condo associations may require that your application be approved; other conditions such as noise level restrictions, regular monthly fees, reserve funds awareness, and condo insurance must also be taken into consideration.
Thoroughly research and ask questions to guarantee that your condo purchase will turn into the home of your dreams. Happy Condo Buying!
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Kid Breukelen Realty Group is Here to Help
Ready to turn your real estate goals into reality? Reach out to Kid Breukelen Realty Group to explore tailored real estate solutions and benefit from our all-in-one support for buying, selling, property management, and mortgage services through Loan Factory, LLC. Let’s make your journey a success!
Rickey Shorter, CPRES, SFR, CAM, MLO, CSM, CSPO
Rickey Shorter | Mortgage Loan Originator | NMLS# 2297502 | getmortgagesapproved.com |
Consumer Assess | Loan Factory, Inc | NMLS # 320841 | 2195 Tully Road San Jose, California 95122 Loan Factory, Inc is an equal opportunity lender.
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Rickey Shorter | Mortgage Loan Originator | NMLS# 2297502 | getmortgagesapproved.com | Consumer Assess | Loan Factory, Inc | NMLS # 320841 | 2195 Tully Road San Jose, California 95122
Loan Factory, Inc is an equal opportunity lender.
