Are you buying a condo and planning to get a mortgage? If so, remember that the lender needs to approve:
- the buyer
- the price (through an appraisal)
- in the case of a condo, the property
What’s involved in approving the property? The lender will check the ratio of rental units, the ratio of commercial space, the number of delinquencies with condo fees, the sufficiency of the reserves, the adequacy of the condo insurance, and even the condo docs. They could deny to finance, for example, if the condo has a right of first refusal to buy a condo.
You should have your lender check the qualification of the condo upfront. It’s frustrating for everyone involved if the lender leaves this to the last minute in underwriting and a day or two before the scheduled closing lets everyone know that condo won’t qualify so they won’t make the loan.
Some lenders have a list of preapproved condos. Some have a variety of programs and can finance with a larger down payment.
If you’re paying cash for your condo purchase, you may be able to negotiate a better price, just to avoid all the uncertainty of the mortgage process.