Buying a Condominium - Can You Get a Loan?
Thinking about buying a condominium? You might want to do your homework first. As people vacate condos and condos foreclose, HOA fees are left unpaid and HOA reserve funds go down. If they don't have owner occupancy rate above 51% you could have problems with conventionsl financing and you will have problems with FHA and VA loans, and now even conventional loans.
If times get bad, the HOA can charge a special assessment to pay for things that require maintenance. As buildings get old and as foreclosures continue, special assessments on current residents will become the norm. And, the payment to an HOA is not an option!
If you do decide to purchase a condo, you will get an up-to-date copy of the HOA documents. Check to be sure the Home Owners Association is viable. The budget reserves should not be less than 10% of the annual budget. You may also have trouble with your loan if there is an individual who owns more than 10% of the complex.
Condominium and townhome developments must have FHA approval to qualify for a FHA loan (purchase or refinance) due to rules implemented in February 2010. Spot approvals for individual units are no longer permitted. Condominiums approved prior to Oct. 1, 2008, must be recertified by Dec. 7, 2010. In addition to this certification requirement, beginning Jan. 1, 2011, in order for an FHA loan to fund, the condominium development also must meet the eligibility requirements at the time of underwriting to qualify for an FHA loan.
To protect yourself, you can check with the FHA-approved list of condominiums on the HUD site. It is located at.
Some of the things FHA screens for are:
*No discrinimation
*More than 50% occupancy
*No pending litigation
*No non-permitted uses
*No assessments or pending assessments
For VA loans,go to govenment site.
To fill this out, select Condo-PUD REports.
Leave #1-4 as it is on the form.
Fill in the city, state, and county in #5.
Leave #6.
Then submit.
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