When you’re considering buying a condo in Florida, there are a number of important factors that you should know and consider that will save you time, money and aggravation. Here are a few tips to help you.
So, you’re preapproved for your mortgage and you are looking at condos. Buying a condo can mean a whole other approval process. Especially if you plan to put less than 25% down. It’s not as drastic as it might sound but all condos in Florida have a different set of rules for approval than any other property type. And each agency whether its Fannie Mae, Freddie Mac, VA or FHA has different variances on approval of the condo association and the condo unit you want to buy.
On top of that lenders themselves might add on some additional restrictions, like a minimum down-payment regardless of what guidelines allow. Here are some quick notes on what you should know:
1. First ask your lender if they have a list of approved condominium projects near you and short-cut the approval process. If they don’t have an approved list, you’ll need to do some additional homework.
2. Guidelines allow as little as 3% down but watch those lender add-ons. Get a copy of this year’s association budget through the listing agent.
3. As long as at least 10% of the annual association expenses are placed into a reserve account, you’re off to a great start. If the association does not put those minimum funds into the reserve account stop right there, since the minimum down payment can now go to 25% down.
4. Assuming the reserve requirement is met and you’re putting less than 25% down, your lender will do a full review of the project.
5. Your lender will need to ask a bunch of questions all designed to ensure that the property is run responsibly. This can take some time, so confirm that your lender begins the condo association approval process early. You don’t want to be waiting for association approval at the end of your contract only to find out there is a delay or even a declined property that could have been addressed early in the process.