Consider what type of lending options are available for a buyer before buying or selling condos & townhomes.
There are very specific requirements placed on FHA loans for multi-family housing developments. To list just a few of these requirements, the project must be on HUD's approved condominium list, or the lender can go through a spot loan endorsement if the project is not on the approved list.
There are many requirements to be considered. Generally, here are some examples of some types of requirements that may be imposed. They may require that a certain percentage of the project be owner occupied (not rental units). They may also may require that the entire project is complete including all common areas and facilities. Another requirement may be that a certain percentage of units are already sold. Also, the project's documents (usually the CC&R's) should not place any legal restrictions on conveyance. A lender may also place a requirement on the amount of units that are more than 30 days delinquent on HOA dues.
If FHA financing is unavailable for the development, there will be a limitation to the number of qualified buyers. Alternative loans can be expensive and may require a larger amount of down payment. In today's market, many purchasers of multi-family dwellings are retirees that pay cash. The lender could also balk at providing a loan if a high number of units are over 30 days in arrears of the HOA dues.
The stability of the HOA should also be considered. In the current market, more and more HOAs are facing insolvency. Owners pay dues, usually monthly, to HOAs for exterior maintenance, utilities, trash removal, and the like. Due to foreclosures and unemployment, many HOAs are having trouble collecting the dues needed to provide these services. This could result in hefty increases in the monthly dues. It's possible the HOA could not pay some of the maintenance, which could result in a drop of property values. If you have found an exceptional bargain on a condo or townhome, there is a strong likelihood the HOA is experiencing difficulties.
The HOA association or any property management company the project has hired should be able to advise you whether the project is eligible for FHA loans and also discuss the solvency of the HOA accounts. Gather this information before proceeding with an offer or putting your unit on the market.
There are many advantages to buying a unit in a development. Usually maintenance requirements by the homeowner are limited to the unit itself, allowing more spare time for the unit owners. There may also be amenities such as barbeques, heated pools, fitness facilities, club houses, tennis courts and other items not usually available in single-family homes. The development may sponsor occasional social gatherings as well.
Some of these multi-family projects are also associated with a nearby resort, and may offer discounts to the resort's amenities, such as discounted rates for green fees or fitness facilities.
You can reduce the amount of surprises you may face in buying or selling condos & townhomes by gathering the facts before beginning the negotiation process.
There are very specific requirements placed on FHA loans for multi-family housing developments. To list just a few of these requirements, the project must be on HUD's approved condominium list, or the lender can go through a spot loan endorsement if the project is not on the approved list.
There are many requirements to be considered. Generally, here are some examples of some types of requirements that may be imposed. They may require that a certain percentage of the project be owner occupied (not rental units). They may also may require that the entire project is complete including all common areas and facilities. Another requirement may be that a certain percentage of units are already sold. Also, the project's documents (usually the CC&R's) should not place any legal restrictions on conveyance. A lender may also place a requirement on the amount of units that are more than 30 days delinquent on HOA dues.
If FHA financing is unavailable for the development, there will be a limitation to the number of qualified buyers. Alternative loans can be expensive and may require a larger amount of down payment. In today's market, many purchasers of multi-family dwellings are retirees that pay cash. The lender could also balk at providing a loan if a high number of units are over 30 days in arrears of the HOA dues.
The stability of the HOA should also be considered. In the current market, more and more HOAs are facing insolvency. Owners pay dues, usually monthly, to HOAs for exterior maintenance, utilities, trash removal, and the like. Due to foreclosures and unemployment, many HOAs are having trouble collecting the dues needed to provide these services. This could result in hefty increases in the monthly dues. It's possible the HOA could not pay some of the maintenance, which could result in a drop of property values. If you have found an exceptional bargain on a condo or townhome, there is a strong likelihood the HOA is experiencing difficulties.
The HOA association or any property management company the project has hired should be able to advise you whether the project is eligible for FHA loans and also discuss the solvency of the HOA accounts. Gather this information before proceeding with an offer or putting your unit on the market.
There are many advantages to buying a unit in a development. Usually maintenance requirements by the homeowner are limited to the unit itself, allowing more spare time for the unit owners. There may also be amenities such as barbeques, heated pools, fitness facilities, club houses, tennis courts and other items not usually available in single-family homes. The development may sponsor occasional social gatherings as well.
Some of these multi-family projects are also associated with a nearby resort, and may offer discounts to the resort's amenities, such as discounted rates for green fees or fitness facilities.
You can reduce the amount of surprises you may face in buying or selling condos & townhomes by gathering the facts before beginning the negotiation process.
About the Author:
Jasper Brinks is a condo specialist and you can learn more about his expertise by visiting his Nibley Utah Homes website where you can search for Hyrum UT Real Estate.
No comments:
Post a Comment