To better understand how condo financing differs from loans on most other types of property, it's important to keep in mind the two sides of financing a property from the lender's point of view. First is the evaluation of your ability to repay the mortgage based on your income, credit and other factors. Second is a thorough assessment of the property itself.
With a condo, the lender must take factors into consideration that aren't relevant to most other property types, such as:
- The state of the homeowner's association's finances, including whether it has adequate reserves and whether other owners are paying their fair share through condo fees
- The terms in the condo documents, some of which can help lenders assess whether the condo is likely to depreciate rather than appreciate in value over time
- How many units are owner-occupied, which may be an indicator of how well the condo will hold its value
In addition to the above, condo mortgage rates can be higher than the interest rates on single-family homes. If you are considering Fannie Mae, Freddie Mac or FHA condo financing, there are also certain requirements and standards for both the condo development and its homeowner's association.
To help make the buying process simpler if you're planning to purchase a condo, consider getting pre-approval for your condo loan with Space Coast Credit Union. Contact us
or apply online