Shifting demographics and the unique housing preferences of Millennials and aging Baby Boomers have driven the condo market to new heights in recent years.
With Millennials and aging Baby Boomers preferring a more compact, walkable, town center-oriented lifestyle that is generally found in more densely populated urban centers — where condos are traditionally the primary choice — the condo market is poised to continue strong growth in the years to come.
When looking to buy and finance a condo you need to be aware of the subtle and not-so-subtle differences in obtaining your mortgage.
In general, condos are more difficult to finance. The reason why is simple: in a traditional single-family home purchase, both the borrower and the property must meet underwriting guidelines to qualify. With a condo purchase not only do the borrower and property need to meet all the purchase guidelines, but a third layer of underwriting qualification is added — the project/community.
It is this third layer that tends to trip up most potential condo purchases. Fannie Mae, Freddie Mac, and FHA all have some specific guidelines that must be met for them to consider the strength of the project an acceptable risk. Among Fannie Mae’s requirements:
More than half of the condo units must be owner-occupied.
No owner may own more than 10 percent of the units.
No more than 15 percent of owners can be delinquent on condo dues.
All amenities must be completed if development is more than 12 months old.
Buyers who make a down payment of less than 25 percent will pay an additional 0.75 percent of the loan amount at the closing or a higher interest rate of about 0.25 percent.
A great place to start your condo search is with your Realtor and your lender. Together they will help you determine project eligibility BEFORE you jump into a sales contract. FHA and Fannie Mae both have lender accessible databases listing their approved condominium projects. So-called “spot approvals” are also available for condo projects not listed, but be aware that the process can be time consuming and may not yield a desired result.
Regardless, with the relative price of condos below that of comparable single-family residences and continued prospects in steady demand, the condo market will provide plenty of opportunity for potential buyers.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickerington 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235