Thursday, May 6, 2010

The Truth About Condo Financing

While purchasing a new condo may be easy, getting a loan approved for a condo may not be as easy as you think! There are several items that may impact your condominium mortgage loan that you should find out before you decide to make your purchase.

When evaluating mortgage applications for condos in Chicago and the surrounding suburbs of Chicago, lenders will consider the following:

How many of the units in the building have been sold or closed?
Most lenders like to see that 70% of the units in a condominium have been sold prior to closing a condo home loan in the Chicago area.

Of these units, how many have been sold to investors (i.e. individuals who plan on renting these units)?
Many lenders prefer to see a high ratio of primary residence purchasers.

What is the status of the Common Areas?
Most lenders require that the common areas (i.e. lobby, exercise room, etc.), are complete prior to closing a mortgage for a condominium unit.

Does the Home Owners Association have adequate reserves?
You will want to know that the condo association has adequate funds in reserve to account for any items that may need repair such as the roof, HVAC or any other building mechanicals.

Is the Home Owners Association or Condo developer in a lawsuit?
Any lawsuit could have a negative impact on the financial condition of your home owners association, potentially leading to higher monthly association dues and possibly lower the value of your unit.

While it is important to do your homework while considering the purchase of a new condo, it is also important to know that condominium financing with as little as 5% down is still readily available for most Chicago and Chicago area condominium buildings.

For a complimentary questionnaire that addresses the important information most lenders require when evaluating condominium mortgage applications, please email Lou Scannicchio, Director of Marketing at lscannicchio@uhloans.com or contact United Home Loans direct at 708-531-8388.

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