If you have a client looking to purchase and obtain financing on an attached condominium, there are a few things to expect through out the loan process. The condominium needs to meet Fannie Mae and/or Freddie Mac guidelines in order to use conventional financing. The lender will send a condo questionnaire to the property manager or the condo association requesting information about the number of units in the project, owner occupants vs. investors, as well as insurance & budget information. This is done simply as a “background check” on the condominium itself in order to ensure the stability of the project.
From a mortgage banker’s point of view, we can see an inability to register who is actually living in the condo and in turn this can make some properties be viewed as high risk. When there are more investors than owner occupants the project tends to not be as well maintained. Fannie & Freddie want to see projects that have over 50% owner occupants.
Condominiums took a big hit to values and became very affordable to investors looking to purchase inexpensive rental properties. The condos also were attractive to 2nd home purchasers. Many bought multiple units in a subdivision, one unit to use personally for vacationing and another as a rental unit.
Depending on how thoroughly the property management company filled out the questionnaire, tells us how much other documentation is needed. It is helpful to have the Listing Realtor provide management company information at the beginning of the loan process. For any questions or comments please email me at Ingrid.Quinn@cobaltmortgage.com or visit me at http://www.ScottsdaleMortgageExpert.com.