Condos & Why Financing Matters in Florida
When I initially meet with clients to hear more about their real estate wants and needs, I will ALWAYS ask them what type of financing they plan to use. This question is sometimes met with guarded answers. However, no competent Realtor will ask to satisfy his/her own personal curiosity. The type of financing a buyer uses dictates what condo developments they will be able to purchase.
Why most FL condominiums don't accept FHA/VA home loans:
History of cash buyers and investors buying condominiums in Florida
Cash deals are less likely to fall through
Government loans have stricter requirements that must be met by sellers + developments
Buyers using government loans are more likely to experience financial hardships that prevent them from closing
Condos are in high demand for investors and cash buyers
Aside from buyers not holding up their end of the deal or not being upfront with lenders about shaky finances, in many cases the condominium developments may be too risky to qualify for a government loan or even for conventional loans. These types of condos are known as Unwarrantable Condominiums. Buyers need to pay cash for unwarrantable condos. A mark of unwarrantable condos is the deal that is "too good to be true."
Signs of an Non-Warranted/Risky Condominium:
A single owner owns more than 10% of the total units (over 21-unit condominium)
Inadequate insurance coverage for building
Condo is managed as a hotel
Litigation (steer clear from this as this usually indicated abnormally high future assessments)
New construction buildings
Established condos that have additional phases in need of completion
High percentage of rented-out units
Too many owners delinquent on HOA fees
How 1st Time Home Buyers Can Purchase Condos:
Work with a Realtor who understands the local market and can find the appropriate developments for your financing package.
Interview lenders who are experienced in condo loans, I've got a great one!
Get your credit score above 640 and save 3% for a down payment in addition to another 3% for your closing costs. New conventional loans with lower down-payments are now available, contact me to learn more. *Non warrantable condos may require 25% down.
Due diligence. I provide my clients with tools to make this easier. :)