The Answers and Documentation
Needed to Determine if a Chicago or
Chicagoland Condominium is a Good Buy
Chicago and the entire Chicagoland region is populated with many Condominium projects ...
This particular market has been rather volatile at times. As builders, developers, homeowners, and Condominium Associations became more distressed during the housing downturn, so did Condominium buildings and projects.
As a result of this volatility, more caution must now be shown by potential buyers when they are considering a Chicagoland Condominium purchase. Buyers must take the time to raise vital questions prior to Contract and purchase.
Why?
Because there are many outside or additional influences that can reflect on the value and "sale-ability" of a Condominium in the future. These influences can also affect the quality of life experienced while living in the Condo.
So what are some of the key questions that you as a potential Condominium Buyer should ask prior to signing a Contract for a Condo purchase? What Condominium Association documentation should be requested? And which of those will be required by most Mortgage Lenders financing your Condominium purchase?
Before you do anything else: Make sure that the property you're viewing and considering for purchase is actually a Condominium, not a Townhome. There is a difference in the type of Ownership you hold with each.
The answer to the important question ... Condo or Townhome? ... can be found through a couple methods ...
The easiest method: Check the County Recorder's website.
Review the last digits of the property pin. If the last 4 digits are zeros, it's almost certain that the property is a PUD or a SFD (Single-Family Dwelling) NOTE: VARIES BY COUNTY.
A 2nd method is: Review the Legal Description.
If the word "PUD" is contained in the Legal Description, the property is a PUD Unit (AKA Townhome). If the word "Unit" is in the Legal Description, the property is most likely a Condominium. (In Chicago/Cook County, go to: www.cookcountyassessor.com. In Will County, head to: www.willcountysoa.com.)
Note: A PUD (Planned Unit Development) often can take on similar characteristics to a Condominium ... but they are treated very differently when reviewed for financing purposes.
It's important to know: A Condominium purchase is no time to work with a rookie Mortgage Originator or Agent.
Work with someone well-versed and experienced in Condominium financing. If considering FHA or VA financing for your purchase, find out if the Condominium is approved (or eligible) for that type of financing. Both issues are extremely important. Get the facts prior to moving forward with your Contract.
Be aware: There are Condominium project types that are ineligible for Conventional, FHA, or VA financing.
Ineligible properties are:
- Projects that are operated as a hotel, even if Units are individually owned.*
- Projects with more than 20% total space used for nonresidential purposes.*
- Those where a single entity, person or otherwise, owns more than 10% of the total units.*
- Any project where the HOA is named as a part to pending litigation.*
- Projects where more than 15% of the total Units are 30 days or more delinquent in HOA dues.*
Additional information will be needed from the Seller or Condominium Association. That information is:
- A complete copy of the recorded Condominium Declarations and Bylaws ... ALL amendments and pages
- A copy of the most recent year's Condominium Association budget
- A completed Condominium Questionnaire
- The number of 30-day delinquent units within the Association
- The number of total Units within the Association. (Hint: Divide the # of delinquent units by the total # of units in the Association. If that # is higher than .15 (15%) you'll have problems financing the unit.)
Special attention must also be paid to the following questions on the Condominium Questionnaire: - Are all common elements and/or facilities complete?
- Is the project subject to additional phasing & add-ons?
- Are there pending special Assessments?
- Is the HOA involved in any litigation, mediation, arbitration or other dispute resolution process?
- Does the Owner's Association have a Reserve Fund separate from the operating account? (Note: If the answer is yes, is that Reserve Fund adequate to prevent deferred maintenance?)
Like pieces to an intricate puzzle, the answers to these questions, plus the documentation you receive will collectively assist in helping determine if the Condominium you're considering is a good buy. When you've successfully answered all these important questions ... you can then proceed with peace of mind and enjoy your new home.
Contact me today! My 40 years of extensive mortgage experience and 2 decades as a licensed IL Appraiser will serve you well throughout your transaction and help you successfully complete your mortgage financing.
I'm easily found at:
Gene Mundt
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI License 216987
American Portfolio Mortgage Corp.
NMLS #175656
Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago
and the greater Chicagoland region, including:
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena,
Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook,
Romeoville, Naperville, etc.), DuPage County, the City of Chicago,
Cook County, and elsewhere within IL & WI.
Referrals are Always Appreciated and Welcomed!
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