Financing for Condominiums VS Single-Family Residences

 

Financing for Condominiums 

VS Single-Family Residences

Everyone can agree ...

Condominiums are "different" from single-family residences (detached, or an attached duplex) in many ways.  

But they share commonalities as well, such as:

• Both Condominiums and single-family residences can be owned, not just rented or leased
• Financing options are similar for both types of property:
• VA Loan:  0% Down (Has an "Approved List" of Condo Associations)
• FHA Loan:  3.5% Down (Like VA, has its own "Approved List", but also allows for "Single-Unit Approvals)
• Conventional:  3% Down or more (Are available on a case-by-case basis) 
• VA and FHA Condominium interest rates are essentially the same as those for a single-family home 
• Conventional Loans' interest rates could be slightly higher ... when putting down less than 25% of the purchase price
• Credit Score requirements to buy or finance a Condominium remain the same as those for a single-family residential borrower

But there are some real differences between the two when buying and financing.  Differences that can matter ... and Borrowers are often caught off-guard when they learn of them.  

Some of those differences are:

• Lenders typically require more documentation for Condominium financing  
• The financial status of the Condominium Homeowner Association (HOA) must be verified via a Condominium Association Questionnaire. The Condominium Association budget and HOA dues/fees must also be verified  
• Lenders typically require a copy of the Condominium Declaration and By-Laws (the Association's internal rules)
• Borrowers, whether resident or investor, must pay a fee  normally charged by the Association or management company to provide this required information (prior to closing).  
• The one time upfront fee, set by the Association or management company, is typically in the $100 to $250 range
• If the borrower will not be living in the Condomnium (buying as an investment to rent) the Association's Declarations and By-Laws must allow for Rental Occupancy
• Interest rates are higher for Condominium investors, as are down payment requirements (20% down possible, but ideally 25% down payment for Condominiums)  

The bottomline is this:  If buying a Condominium (or refinancing) and seeking a Loan Approval for it, the financial "health" of the Condominium Association and the information and answers provided by them or their designated management company will determine much.  

Ask questions!  And make sure to choose and work with a lender (and agent) that is informed and experienced conducting Condominium financing and well-versed in the differences between property types and how to get them closed efficiently and successfully. 

Are you hoping to Construct, Buy, Refinance or Purchase a home or investment property in Chicagoland or somewhere else in Illinois or Wisconsin?

Looking for mortgage financing answers, options, solutions, and experienced assistance?  
Contact me! I'll put my 40 years of Mortgage experience and expertise hard to work on your behalf.

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

www.genemundt.com

gmundt@goapmc.com

   

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, Frankfort Square, Joliet, Shorewood, Elwood, Lockport, Wilmington, Crest Hill, Symerton, Braidwood, Channahon, University Park, Beecher, Plainfield, Bolingbrook, Romeoville, Tinley Park, Homer Glen, Crete, Peotone, Naperville, etc.), DuPage County, Kane County, Grundy County, the City of Chicago, Cook County, and elsewhere within IL & WI.

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