The term “condominium” can refer to many kinds of homes where people can buy individual apartments and live in close proximity with one another. Building amenities, outside areas, and exterior rooms are all common for all. That is, the maintenance and repair of these external facilities other than the condominium goes with the association. As there is a slight difference from the normal condo-ownership procedure the non-warrantable condo loan process also differs. When considering a loan one needs to know more details involved.
Check Non-Warrantable Condo Is Right for You or Not
Before purchasing a non-warrantable condo, it is essential to consider certain factors into account. The following challenges could come up for you as a condo buyer, owner, or seller:
Difficulty with Condo Purchase
There are some options available when buying them, one is non-warrantable and the other one is warrantable. But before purchase try to learn more and then step into buying it. Because the lenders will be more careful than usual when it comes to non-warrantable condos. At that time, they may ask for more down payments. If the down payment is less than some percentage like 20%, one may need to pay Private Mortgage Insurance (PMI) which protects the lender if one fails to return the loan amount.
Easy access to Financial Records
If you want to know how the association is performing financially, you should look at the financial documentation of the non-warrantable condo. An analysis of the reserves and budget may be part of this process. However, the financial records might be hard to come by.
The Status of the Developer’s Funds
A condo may not be warrantable for several reasons. Such as if the project’s reserve fund is insufficient to cover sudden expenses or if multiple owners are past due on dues, it could make it not warrantable.
Problems Selling the Real Estate
Condos that do not come with a warranty may not be attractive to buyers when the time comes to sell. One problem is that no government agency is supporting these. In addition to that, they may not have the money for the down payment. Think about the future of the investment before purchasing a non-warrantable condo.
Also, a non-warrantable condo loan is available only with certain lenders only. Most retail banks do not offer financing for a non-warrantable condo. So, make sure you have enough money for a larger down payment and a higher interest rate. So, remember this whenever you talk to the buyers or the real estate agents.
