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Is owning a condo for
you?
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.
Now
that 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 out.
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 special
ones?
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
buying.
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 this program. | 
