Condominium living has become a very popular form of home ownership, do you know what the most important condo question to ask is?
The First Question
The first question a condominium buyer should ask is whether the condominium complex is a warrantable or non-warrantable condominium? A non-warrantable condominium, by definition, is a condominium that does not meet the minimum eligibility standards as set by Fannie Mae, Freddie Mac or FHA.
A condominium buyer must go through a two step approval process, the buyer could get approved for financing but if the condominium complex does not meet the standards it will get declined. It can not be stressed enough the importance for a condominium buyer to work with both a knowledgeable Realtor and mortgage officer that understand the local condominium market.
Mortgage loans on units in warrantable condominium receive better terms than loans on units in non-warrant-able condominium. If you are a homeowner of a non-warrantable condominium contact your RealPro SuperStar℠ to get information on how the entire complex can become warrantable!
A Warrantable Condominium:
- At least 70% of the total units in the project must have been sold or must be under contract to purchasers who will occupy the units as their primary residences or second homes.
- The condo yearly budget must designate 10% of the budgeted income as a separate reserve for repairs and replacement cost of major common elements.
- No one person can own more than 10% of the total number of units.
- Delinquent assessments – no more than 15% of the total number of units in a project are 30 or more days delinquent on the payment of their homeowners association assessments.
- Fidelity bond coverage required if over 20 units.