Don’t fret if the unit you love doesn’t qualify for FHA financing. Buying a condo is a lot like purchasing a “regular” home, but with one big difference — mortgages are tougher to come by. Most real estate agents, buyers or sellers don’t think about it in advance. If you can sell your condo without a realtor, you can save thousands on closing costs. Hire a broker to sell it for you. He is also the managing editor of "Midwest Real Estate News." Ask agents how many short sales they've handled in their careers, how long it took them to sell these condos and how often they nabbed an offer near the seller's original listing price. I have a condo in Northern Toronto that has less than 200k in mortgage that I anticipate I can pay off in 5-10 years depending how aggressive I get. Work with your real estate agent to isolate and flag these issues before you go on the market. Unique Features Factors such as floor number and the unit being garden or swimming pool-facing can also add value to the price of your property. It’s important to first find out if the condo is eligible for mortgage financing, as there are many different factors that … 1. All banks believe a condo complex or building occupied primarily by homeowners is less risky than one with a lot of rental units. Financial Implications of Condos. As a condo owner, you have to follow the rules of the HOA. CONDO—FINANCING WITH A MORTGAGE* This version: April 2011 Overview This mini-case takes us back to b-school grads Sally and Dave. Having FHA mortgage approval increases the odds selling your condo will happen quickly and for a price at least around the average market value – and hopefully above that. We have one person that owns too many units and too many people that are behind in their HOA fees. Even worse, most mortgages have a due-on-sale clause, where you have to immediately pay the mortgage in full if you transfer ownership of your house. Selling a home vs. a condo can be entirely different because of the nature of how these two housing choices are unique. Single-Family Homes Do I Pay A Penalty if I Want to Sell My Condo? It takes a lot of work to sell quickly, and for the best possible price. You don’t have control over the common areas, you have to pay your monthly dues and assessments, and you have to play by the rules of the condo association. Their mortgage costs $1,800 a month—a whopping 45% of their take-home pay. The difference between an apartment and a condo … The good news is that condos tend to sell faster than single-family homes even in a down market, because condos are typically smaller, cost less, and have lower maintenance costs. In general, if you set an asking price that is lower than what comparable condominium units have sold for, you'll sell your unit in less time. So, you have a few choices here. Private mortgage insurance may be a bit more expensive, and the appraisal is completed on a special condominium appraisal form that may cost an extra $100 more because of the additional data the appraiser has to provide regarding the condominium association of both your condo and the projects the appraiser compares with yours to establish an opinion of value. But as lending standards have tightened, what appear to be small things can really mess up a deal. While you are not a member of that HOA and did not have a contract with it, they are a legal entity and have a contractual relationship to the State obliging them to live-up to the legal terms set in the… Read more », I am buying a condo and just found out (after getting a loan commitment letter) that the reserves dont meet loan requirements and I would have to put up $20000 more than originally estimated. If a lawsuit filed by the HOA against the builder has blocked the sale of my condo for months, do I have legal recourse? I am in that situation now and hard to get info. However, it is in your best interest to get the pre-approval during your 10-day cooling period so that if it becomes clear, you will have troubles with financing, and you still have the option to back out of the purchase with no obligations. Whether you are shopping for your first mortgage or have owned homes in the past, you may be surprised to learn that condo mortgages are different. Set an asking price for your condominium. My HOA says I can not sell my property below $ 105.000 !!! Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow. If you can sell for cash, you’re good. An attorney should be consulted if a homeowner feels that an HOA rule might be inappropriate. You just don’t want … In some cases, you may even need to find a different lender, such as a local bank or credit union that would be more flexible than a big bank. Let’s look at two examples of a $450,000 condo with very different condo fees. At this rate, they can only afford to put $300 a month toward their student loan debt. For tax purposes, a rental house or condo is considered an investment property, which makes the sale a bit more complicated. But selling a condo is not usually as simple as putting a sign-up. Buyers may only qualify for Fannie Mae, FHA or USDA financing, and may opt for an approved condo to avoid any lending challenges. I stopped into a handful of open houses in my building, which enabled me to interact with the realtors selling the units. Ask your HOA president or management company how many renters are in the complex, or if one owner owns more than one unit. That’s why, if you’re a seller, it’s important to do some work ahead of time. If a borrower defaults on a condo loan, then the banks have real property to deal with rather than shares of a stock, which can be harder to sell. Moving from Condo to House, Sell and Buy or Buy with high leverage? When a borrower gets a mortgage on property the borrower signs a contract (the mortgage) that commits the borrower to pay the lender a series of payments over a specified period of time. Work with your real estate agent to isolate and flag these issues before you go on the market. As a result, most lenders may not give a buyer a loan if the complex has too high a ratio of tenants to owners. The Smiths decide it’s time to sell their home, so they get in touch with a real estate pro. The two most important factors in the sale of a … Below is an explanation of what happens to your mortgage when you sell your house. Buyers often have several similar condo units from which to choose. The mortgage is still in your name, and you would still have to pay it. Condos that aren’t on the approved lender agency lists may be harder to sell.