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A condominium, or condo, is one of the most popular forms of residence, especially among working professionals, retirees, and young couples embracing the joy of first-time homeownership. But while they are a frequent choice for new and veteran homeowners and appear to function similarly to apartments at a glance, it also bears reminding that there are many key differences for prospective condo loan applicants to be aware of.
We're here to make the process a whole lot easier, with tools and expertise that will help guide you along the way, starting with our FREE Condo Mortgage Rate Quote.
We'll help you clearly see differences between loan programs, allowing you to choose the right one for you whether you're a first-time home buyer or a seasoned investor.
Condos - Buildings that are divided into and made up of individually owned units. Although similar in nature to apartment buildings, each residence inside them is the property of a specific owner as opposed to a landlord or property management firm. In effect, condo owners own only the portion of the structure in which they reside – specifically, the interior of their residence, as external and shared areas of the building are typically owned and managed by a condo or homeowners association (HOA).
HOA - A group of owners who collectively work together to set and enforce building rules and guidelines – and shoulder the burden for any shared expenses. Put simply: A condo owner is responsible for everything that goes on inside their unit, including maintenance and repairs, and will pay regular fees to the condo association for upkeep of shared areas, which are instead the HOA’s responsibility to maintain.
In general, condo owners are responsible for abiding by the HOA’s rules, being respectful to their neighbors and maintaining their own individual residence. By way of contrast, homeowners associations are responsible for maintaining common areas such as hallways, yards, recreational facilities and courtyards, and providing upkeep of grounds (shoveling snow or trimming trees as needed).
Condos are a popular choice for first-time home buyers as they’re often smaller, more affordable, and less demanding or time-consuming to maintain than single-family residences.
A warrantable condo is one that potential home buyers can finance and underwrite using a conventional mortgage. In order to do so, the condo must first meet certain minimum guidelines laid out by traditional mortgage investors like Freddie Mac and Fannie Mae. For example, to meet these requirements, sample guidelines include stipulations such as:
Non-warrantable condos are more difficult to buy and sell, as Freddie Mac and Fannie Mae have determined them to be too risky an acquisition, making them more difficult to acquire financing for. To obtain a non-warrantable condo, you may have to seek outside financial assistance beyond that which could typically be obtained through a conventional mortgage or traditional lender. Feel free to speak to one of our Home Loan Experts about your options.
The type of condo that you wish to buy and the intended uses that you have for the property will help you determine the type of residential financing that you need. Once you’ve narrowed your choices down, there are several different types of loans that can help you with your purchase:
Purchasing a condominium using a condo loan is often a good bet for families just starting out or individuals who wish to put minimum maintenance and upkeep into their residence.
While often generally comparable to loans extended on single or multifamily houses, sometimes condo loans can be more expensive. That’s because these loans may be considered riskier to lenders, as condominiums introduce more quirks and restrictions as related to shared and/or jointly owned building spaces.
Prospective condo owners should ask homeowners associations and seller’s agents to provide a full overview of building rules (and finances) before applying for a condo loan. That may mean asking to see important clauses and covenants, pet regulations, information on annual dues and planned expenses and more. Note that some condo associations may also wish to conduct an introductory interview with you as well.
At Pathway, we will Help Guide you through this!
Condo loans are specifically designed to help potential home buyers facilitate the purchase of condominium units. They’re available in many familiar forms from the same lenders who may extend mortgage loans on single- or multifamily residences. Potential buyers in the market for a new condominium may wish to consider other similar home options such as apartments as well. If you’re ready to get started, you can apply online or give us a call at (844) 777-1616.
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