How to Select a Condo For Purchase
When looking at San Diego condominiums for purchase, it is important to find out some key facts about the project BEFORE you make an offer.
Chances are you will be financing your San Diego Condo purchase and certain things come into play when getting a loan approved.
Here are some key points you should know: What is the owner occupancy of the project? It should be at least 60%-70% on the average or else it is viewed as nothing more than an apartment building.
Pride of ownership might also be lacking in a building with low owner occupancy.
Are there any lawsuits pending for the project or your particular unit? Lenders do not like to be party to lawsuits.
Besides, do you really want to own a unit with some type of construction defect? How many units does one person or entity own? No project can have one person or entity owning more than 10% of the units.
With the recent economy, what if the majority owner cannot pay their homeowners association dues? The homeowners association could suffer losses and not be able to maintain the project.
Does the project maintain a fidelity bond for their Board of Directors? This is important not only because lending guidelines require it, but if there is a dishonest act causing a loss to the HOA's savings, fidelity bond acts as insurance for the funds.
Are the reserve requirements of the project fully funded? Projections are used in studies to determine what level of HOA dues need to be set aside for deferred maintenance.
Lending guidelines dictate that a HOA needs to have enough money set aside to perform any deferred maintenance.
Do you really want to buy into a project where you could be slapped with a large assessment fee to take care of deferred maintenance or to shore up the HOA funds? How many units may be in foreclosure or how many are bank owned? This fact is important as the owner occupancy could be affected or the HOA could be owed a great deal of money.
This would affect the overall maintenance of the building and its reserves.
You don't want to buy into a project that isn't properly maintained.
What type of financing are you using? A very high conventional Loan to Value Ratio (95%) or even an FHA or VA loan could be more than impossible to close in this real estate climate.
Lenders (partly due to mortgage insurance) do not want to make high Loan to Value (LTV) conventional loans due to marketability and overall risk.
Owner occupancy or reserves issues 80% is the maximum LTV a conventional lender will consider right now.
Check with your lender about the current approval of your project.
DO NOT forget your individual property insurance for the inside of the unit.
You will need this type of insurance to cover your own property and it is always a good idea to have a homeowner's warrant on your unit as well.
Chances are you will be financing your San Diego Condo purchase and certain things come into play when getting a loan approved.
Here are some key points you should know: What is the owner occupancy of the project? It should be at least 60%-70% on the average or else it is viewed as nothing more than an apartment building.
Pride of ownership might also be lacking in a building with low owner occupancy.
Are there any lawsuits pending for the project or your particular unit? Lenders do not like to be party to lawsuits.
Besides, do you really want to own a unit with some type of construction defect? How many units does one person or entity own? No project can have one person or entity owning more than 10% of the units.
With the recent economy, what if the majority owner cannot pay their homeowners association dues? The homeowners association could suffer losses and not be able to maintain the project.
Does the project maintain a fidelity bond for their Board of Directors? This is important not only because lending guidelines require it, but if there is a dishonest act causing a loss to the HOA's savings, fidelity bond acts as insurance for the funds.
Are the reserve requirements of the project fully funded? Projections are used in studies to determine what level of HOA dues need to be set aside for deferred maintenance.
Lending guidelines dictate that a HOA needs to have enough money set aside to perform any deferred maintenance.
Do you really want to buy into a project where you could be slapped with a large assessment fee to take care of deferred maintenance or to shore up the HOA funds? How many units may be in foreclosure or how many are bank owned? This fact is important as the owner occupancy could be affected or the HOA could be owed a great deal of money.
This would affect the overall maintenance of the building and its reserves.
You don't want to buy into a project that isn't properly maintained.
What type of financing are you using? A very high conventional Loan to Value Ratio (95%) or even an FHA or VA loan could be more than impossible to close in this real estate climate.
Lenders (partly due to mortgage insurance) do not want to make high Loan to Value (LTV) conventional loans due to marketability and overall risk.
Owner occupancy or reserves issues 80% is the maximum LTV a conventional lender will consider right now.
Check with your lender about the current approval of your project.
DO NOT forget your individual property insurance for the inside of the unit.
You will need this type of insurance to cover your own property and it is always a good idea to have a homeowner's warrant on your unit as well.
Source...