Condominiums have been a popular housing option for a number of decades. Buyers usually get a more modern living space, newer amenities for the buying dollar and they do not have yard and landscaping costs or obligations that can take up their time. They tend to be on the lower end of the market from a cost standpoint and are very attractive for first-time home buyers. Many have a club house, pool and other attractive features that single family homes in the same price range do not.
So, you may ask, what is the down side to buying a Condo? First, there is less space between you and your neighbors. Although properly built units are well insulated, some apartment conversions to Condos may not be, so you may be able to hear your neighbors when you don’t want to. Check that issue out when you are looking at possible purchases.
Obtaining financing in our current market is difficult. Unfortunately, many real estate agents do not understand the pitfalls of Condo financing. FHA financing has been very popular with Condo buyers because they only need 3.5% of the purchase price as a down payment. Condo complexes MUST be approved by the FHA. It is a complex process and most can not meet the qualification guidelines. There are only just over a dozen FHA approved complexes in the greater Sacramento area.
Conventional financing is the other popular option for Condo buyers. Most conventional lenders follow Fannie Mae guidelines so that they can sell their loans on the secondary market. In order to do so each lender will ask for a Condo Certificate from the home owner’s association management. This certification covers many aspects of the HOA to determine if the complex is worthy of being financed. There are many factors that they review: the number of units occupied by the owner, the number of units current with their dues, liens against the property, litigation involving the HOA, to name a few. In this market there are very few Condo complexes that will pass muster on all counts.
That leaves potential buyers with very few options. Portfolio lenders, those who keep and service their loans rather than selling them on the secondary market, commercial banks and hard money lenders may consider some complexes. Most buyers will not consider interest rates offered by those institutions acceptable. Of course, for a very small percentage of buyers, there is always cash.
If a buyer can successfully navigate the financing maze for a particular unit they may complete a purchase. Remember that most people only stay in a home (house or condo) for five to seven years. We always counsel our buyer clients to consider what they will have to do to sell any property and consider that when making a buying decision. If you are considering a Condo, potential buyers will run into all of the financing issues that you have faced. Lender requirements may be even more stringent in five to sever years.
When buying a single family home you may run into some of the issues you would find when trying to buy a Condo but not nearly as many, nor are the lenders as picky about so many issues. Lenders prefer single family homes.
Your chances of completing a purchase on a single family home are much greater. The process is not as arduous or frustrating and the asset will be easier to dispose of then you are ready to sell. Single family homes also tend to appreciate faster than do Condos, something most people do not think about in a down market.
If you are still interested in purchasing a Condo, get in touch with us and we will be happy to help you navigate the mine field you are about to enter. There are Condo units that can be purchased. You just have to know what to do and how to do it. Call us at (916) 337-0658 in the Greater Sacramento area.
Reverse mortgages were developed to help older homeowners maintain financial independence during their twilight years. In order to qualify they have to be 62 years of age and have sufficient equity to warrant loan qualification. Once approved, they would receive a monthly check to help cover living expenses. When they passed on the lender would own the home.
In theory, it sounds good. Homeowners who were seriously considering a reverse mortgage were required to go to financial counseling to ensure that they understood the ramifications of the program.
Apparently, there have been some loopholes in the application of the program which have caused some homeowners real problems. In fact, AARP has taken the Department of Housing and Urban Development to court because some of these Reverse Mortgages have caused participating homeowners major problems.
Select this link to view the complete New York Times story:
Government law makers have spent a lot of time discussing the future of Fannie Mae and Freddie Mac, the two huge government backed giants in the mortgage industry. The past practices of these two government sponsored enterprises have made their management wealthy and provided excellent returns for investors, leaving the tax payer holding the bag to the tune of well over one hundred billion dollars. Obviously, something has to be done.
Unfortunately, government focus seems to be on protecting investors with little regard to borrowers. Pundits tell us that the 30 year fixed rate mortgage, the standard for home financing for decades bay go the way of the Dodo bird.
Select this link to view the full New York Times article:
The Federal Housing Administration insures real estate loans for qualified borrowers. This program allows qualified borrowers to purchase a home for as little as 3.5% down. Very few other lenders or government programs will allow borrowers to qualify for loans with so little down. Most lenders want a buyer to have 20% down on a home they intend to occupy and 25% or more for investors.
Loans that close after April 18, 2011, will include a higher insurance premium.
Select this link for the full story from the New York Times:
THIS MONTH IN REAL ESTATE—MARCH 2011
The monthly video, “This Month In Real Estate” covers real estate related topics for buyers, sellers and borrowers. Mortgage interest rates continue to remain low. That factor, combined with excellent values has resulted in an increase of sales by 2%. Also mentioned is the importance of quality photographs of your home, enabling you to stand out on the Internet, where most buyers start their home search.