A condo is a vertical subdivision and when you own one
you do not own the walls, you own airspace. This is the space
between the walls and the ceiling and floor. The actual structure is
owned by the homeowners association. They also own the majority of
the common areas and that is why it is their responsibility for the
upkeep of these areas. There is an exception to this rule and that
is when you are buying into planned developments.
These developments have you purchasing condo
townhouses and the land beneath your unit. In these cases you would
be responsible for the inside of your condo but the homeowners
association will have to maintain the outside.
you have decided to get a condo you need to decide whether or not to
get a new one. Everyone wants to purchase new but there are some
serious drawbacks to doing this. Almost every building will have its
fair share of kinks and building defects. If you were to purchase
older condos there would be more of a chance that these defects have
been taken care of. And if you are buying new you could run into
other problems due to these defects. Such as sales being held up.
This happens when the homeowners association has to sue the
developer in order to get the defects fixed. Lenders will not be
wanting to approve loans when there is a lawsuit pending.
It is not uncommon for the homeowner's association
fees to rise quite quickly. This is primarily because the developers
start off with the fees low and it takes awhile for the association
to realize just how much they are going to need in order to cover
all of the expenses that need to be taken care of.
If you are buying a resale condo you need to do your
homework. This way of purchasing has some seriously advantageous
qualities such as being able to talk to other owners. By asking them
some important questions you can find out if this is someplace that
you really want to buy. Be sure to ask them what they like about
this complex as well as what they really don't like. You might also
want to ask them about the other tenants who live there, are any of
them trouble makers? These types of questions can be a big help when
it comes to making your final decision.
Getting a condo mortgage is always a good idea no
matter how well off you are and what you can afford. Even if you
have enoug h money to buy your condo outright you should still get a
condo mortgage. This gives you the flexibility that you may need if
it turns out that you do not want to continue living in this
particular condo. When you get a mortgage you will not be committing
such a huge amount of your money to something that may not work
In order to avoid buying a bad condo you will need to
some key questions. These questions include:
Is the condo complex managed? By who? If it turns out
that it is not professionally managed you should ask why.
How much money does the homeowners association have?
Before you buy your condo you should take a close look at their
financials, in fact you should even make the sale contingent on them
looking good. You might also want to ask if they are planning on
raising their fees in the next few months.
Find out how much your fees will be and what other
fees in the area are like. This will allow you to get an idea of how
the funds are managed.
Ask about the contracts and leases, are there any
Mortgage Insurance for your Condo:
FHA 's mortgage insurance programs are a wonderful
invention that has changed the way that lenders lend money. It
is these loans that make it possible for people to get a loan to
purchase a condo and own more than simply their own unit. When you
purchase a condo you will own not only this unit but also parts of
each common area. And since it is so important for renters to have
their interests insured they will receive protection from being
displaced when their apartment building gets turned into condos.
Your loan can be protected for up to 30 years in order
to buy a condo, the condo building has to have at least 4 units and
they can be semidetached, detached, they can be in the form of a row
house, units with an elevator or walk ups. You will need to get this
loan just as you would any other from a lending institution and it
will be insured by the Federal Housing Administration or the FHA
under 234(c). You do not need to put much of a down payment down in
order to get this insurance it can be as little as 3 percent. The
fact that FHA insurance allows for buyers to get over 97 percent of
their home they are getting to be more and more popular.
You can even get some of the closing costs financed,
this is especially useful to those with lower incomes. You will find
that FHA will also limit the amount of money that others can charge
you for their fees and they will also set some limits of the overall
size of your mortgage. These limits will be dependent on where the
purchase is located and how many units you are going to be
There are other restrictions that involve 234 (c), for
example insurance cannot be given unless the condos have been condos
for at least one year, if the person applying for the insurance used
to rent from the complex or if the complex was only converted
because that is what the tenants wanted, the majority of them
anyway, There will need to be at least 80 percent of FHA insured
mortgages that are made to owner occupants.
As long as you are going to own the condo and live in
it and your credit is in good shape you will be able to take part in