Buying a Condominium in today’s real estate market is more difficult and sometimes more expensive than buying a Townhouse. The reasons are related to financing and insurance. Click here for a definition of the difference between Condos and Townhomes.
1) Condominium Complexes must have prior approval by FHA, the Federal Housing Administration, before buyers can obtain an FHA loan. Buyers are currently using FHA loans because they have the lowest downpayment obligation of just 3.5%.
2) Condominiums need an HO-6 insurance policy before lenders will agree to put a mortgage on the property. An HO-6 is a special policy providing both some coverage for the contents of an individual unit and some personal liability coverage.
3) Lenders require a special disclosure from the association for which a 200-400 fee is not unusual. This fee is then paid by the buyer as part of their closing costs.
4) On Conventional lending, those loans not guaranteed by the government, many lenders charge a higher interest rate on loans for Condominiums.
When shopping for a property in Apple Valley, Eagan, Lakeville, Farmington, Rosemount, Burnsville, Savage or Prior Lake be sure to pay attention to the legal description. It’s a misconception that all Condos are in buildings with long hallways and elevators.
If you wish to know the status of an individual property, or the value of your own home, just click here and send me the address along with your request.