Navigating the Condo Purchase
The Development Types per Lending
First things first. Do your homework. You may have a basic understanding of what a condo is. You own your unit within a larger building or community. You jointly own the exterior property and common areas with all unit owners in the building or community. Condos are a form of community ownership and fees referred to as Homeowner’s Association Fees (HOA fees) are paid by each unit owner for the maintenance of the common areas. Each condo development is different as to what fees are used for and these are questions you will want to have answered by your real estate professional. Many developments have a “Frequently Asked Questions” sheet that can be very informative and may spur additional questions you may have.
Once you have your questions answered by your real estate professional and decide that condo ownership is a fit for you, the next thing you will need to know is what type condo development you are purchasing in and what type financing will be available to you. Here on the Emerald Coast, this can be a bit tricky and downright daunting. It is not like a condo purchase in, say, Dallas or Atlanta, as our market is considered a resort area with few permanent condo occupants.
There are two types condos along our sandy beaches; warrantable and non-warrantable. The most important difference in the two are the type financing that can be offered within the development. Warrantable is easily financed with a conventional loan and with the consumer receiving traditional interest rates and down payment amounts. Non-warrantable developments do not allow for conventional lending and requires what is called a Portfolio loan, meaning a bank held loan. Down payments are higher, as are the rates, because they are considered “riskier” and are not sellable on the secondary market.
As a local mortgage lender, we have the experience to help you navigate your way to a level of comfort regarding your condo purchase. In the future, I will delve deeper into the property lending approval process and how it affects you, the consumer. Until then, please enjoy our beaches and call with additional questions.
Susan Miller
NMLS #1204933
Interlinc Mortgage Services, LLC
225 Main Street, Suite 14
Destin, FL 32541
334-714-3418
