Thank you for your great question this afternoon regarding purchasing a condo.
Why does the condo I want to buy have to be warrantable? What does that mean? How does that affect me and my purchase?
Lenders are looking to finance "warrantable condos". If your condo is "non-warrantable" we may have much more difficulty in obtaining financing.
What are mortgage lenders looking for in a warrantable condo? Some of the items to be addressed are below that does not mean that there are not other considerations a specific lender may have on their list:
How do they determine their level of risk on the condo property, not just the Buyer?
You may be able to obtain financing or obtain financing at a lower interest rate if the lender believes their level of risk is less if:
1. The condo project is fully complete and all the common areas are insured. The condo you are looking at may appear complete but if you find that in the condo documents there are still more phases or incomplete or non-existent common area amenties as originally planned then this could be an issue.
We are finding more and more that all phases have not been completed as planned due to the turnback in the economy or maybe additional pools or tennis courts are not complete as plan. Sometimes a lender may be able to get a commitment on a property by phase - so please do not loose hope on the condo of your dreams but review of your condo documents is of the utmost importance.
2. Lenders do like to know that the Homeowner's Association is under the control of the unit owners not the developer. Typically control stays under the Developer until a certain number of units have been sold. Sometimes from the Buyers outlook it is still good to have the developer control the association incase there are major dollar items still to be addressed in unplanned issues which may arise in the build out of the complex, other times it is much better to be Homeowner controlled so that the developer cannot change master deeds, unit deeds and complex plans without the full acknowledgement and agreement of the owners of the complex.
These are but two of the items which may appear on a lenders list to determine whether a complex is warrantable or not.
It is of the utmost importance to deal with an educated, experienced and enthusiastic Realtor in your condo or home owner purchase, there are just so many "moving parts". I can also recommend to you very helpful and educated to the condo market loan officers to assist you in your purchase. You have the power to create the best team in your real estate transaction, start by finding the knowledge based Realtor to assist you.
Should you be interested in my services whether buying or selling a condo in Massachusetts or a single, multi or investment property or land development, please give me a call. My cellular is 781-910-7294 and my email direct is MaryBeth@TradeWindsRealtyGroup.com. Visit our website and also add it to your mobile phone. Simply put our website http://www.TradeWindsRealtyGroup.com in the browser bar of your cellphone and click and here you have Massachusetts Real Estate Information right at your fingertips! We look forward to assisting you, for myself and my TradeWinds Realty Group llc Team, we thank you. Regards MaryBeth Mills Muldowney, Broker Owner, TradeWinds Realty Group llc
the Homeowners Association has been controlled by unit owners (as opposed to the developer) for some period, most units are owner-occupied, and no one person owns more than 10% of the units. Loans on units in warrantable condos receive better terms than loans on units in non-warrantable condos.