Families and individuals who chose to live in the city may find it hard to look for a house and lot. Those who plan to move from renting to purchasing a home may consider a condominium unit.
Condominiums are popping up all over urban cities in the country. There are even quite a number in suburban locations. They can be a practical and classy alternative when houses and lots in the city are steeply priced.
If you’re planning to get a condo unit, you can still make use of home loans. However, purchasing a condominium can be slightly different from buying a single-unit home.
When you buy a single-unit house, all of it, including its amenities, is yours. In a condominium, you are only buying a unit. All the other common areas are beyond your control. Some lenders may consider a condominium purchase riskier than buying a house. However, when it comes to down payment, it usually is the same.
Dealing with the Down Payment
When it comes to the down payment for a condo unit, the higher the better. If you put at least 20 percent down payment, it will reduce the risk to the lenders.
This is true not just for condo units, but for all properties. The higher the down payment, the more secure the lender becomes. In fact, a higher down payment benefits the borrower as well.
First, if you put a big down payment, the loans principal balance is significantly reduced. The amount of money to which the interest rate is applied is lower. Another reason is that a bigger down payment results in a lower interest rate.
For a single-unit house, the 20 percent down payment is enough to reduce your rates. For a condo unit, you will have to shell out an amount that’s 0.125 to 0.25 higher for you to get a lower rate.
If you choose to put a down payment that is larger than the minimum required, there is a bigger chance that a lender will approve your mortgage loan. A larger down payment lowers the risk and shows the borrower that you’re serious about purchasing a unit.Find the best mortgage rates, click here.
Is a Large Down Payment Enough?
If you truly want a good loan with the best rate and favorable terms, you have to do better than putting a big down payment.
A stable employment and good credit will put you on a better ground when applying for a loan. A steady employment means you have a stable income. A good credit means you are in control of your earnings and debts. The combination shows your healthy cash flow, thus, lowering the risk further.Connect with a lender, click here.
Make Sure Your Condo Association is Approved
What’s the point of having a good loan when your condo association isn’t approved by your lender in the first place?
Condos are different from homes because, in a condo, every unit owner in the area, like you, owns a piece of the condo as well. You own a unit and your control is just confined within the walls of that unit. Everything else that happens outside of it is beyond your control. For example, if many unit owners default on the loan, it can cause the value of your unit to plummet even if you have been paying in full on time.
Almost every lender requires a condo association to complete a questionnaire. This will be the basis to approve the association or not. If your condo’s association doesn’t get approved, you can’t use secure a mortgage loan from the said lender.
Purchasing a condo unit is not impossible. The down payment and the association are two of the important factors to consider when buying one. It is also equally important that you shop for lenders until you find one who is willing to provide the funding.
Remember that a lender will gauge your risk level. Make sure to provide them with all the positive factors that can have a good impact on your loan; anything that can reduce the risk. Some lenders may not be as warm on the thought of condo loans, but there are still many who are willing to provide the necessary financing. Make sure you shop around.Click to See the Latest Mortgage Rates»