What is a disadvantage of condominium office ownership?
Along with mortgage and property taxes, condominium owners pay homeowners association fees (HOA fees), which are monthly dues that go toward community amenities, building maintenance, cleaning services for common areas, upkeep of laundry facilities, and more.
What does a warrantable condo mean?
A warrantable condo is one that a homebuyer can finance using a conventional mortgage, after having been approved under a set of guidelines set by government-sponsored enterprises Fannie Mae and Freddie Mac. If you’re looking to buy a condo, making sure it’s “warrantable” can be vital in being able to pay for it.
Why is it hard to finance a condo?
Getting a mortgage for a condo is generally harder than getting a mortgage for a house. A condo unit is part of a multi-unit development, so the borrower’s finances are intertwined with others — and lenders see this type of home as a riskier investment.
What is the owner occupancy requirement for condos Freddie Mac?
Owner-occupancy requirements for New Condominium Projects At least 50% of the total units in the project (or at least 50% of the sum of the subject legal phase and prior legal phases) must have been conveyed or must be under contract to purchasers who will occupy the units as their Primary Residences or second homes.
What triggers a full condo review?
The criteria for a full review is that the condominium needs to have 51% or more of its units be an owner occupant. This means it needs to be a warrantable condominium unit. Mortgage lenders do not want to see any more than 15% of the condo homeowners association dues delinquent for more than 30 days.
What do you actually own when you buy a condo?
Basically, condo buyers will own the condominium unit itself, and what’s called an “interest” (along with all the other owners) in the “common elements” (sometimes called “common areas”) of the condominium project.
Why is a non warrantable condo risky?
When a condo is labeled as non-warrantable, it means that it does not meet conventional guidelines and will not be bought by government-backed entities like Fannie Mae and Freddie Mac. Many lenders consider financing a mortgage for this type of property to be too risky which can make it harder to finance.
How much should you earn to buy a condo?
Eligibility versus affordability Some financial experts say that your monthly mortgage repayment, including principal and interest, should not exceed 30% of your gross monthly income. This is the same as the Mortgage Servicing Ratio (MSR) for HDB flats and new ECs. Others say that such requirements are too stringent.