March 29th, 2018 12:42 PM by Dana Bain
condo is a lot like purchasing a "regular" home, but
with one big difference -- mortgages are tougher to come by.
impose a different set of rules on you when you buy a condo. They may sometimes
increase your interest rate.
With condos and co-ops, it’s not just your creditworthiness the lender has
to worry about. It must also verify the fiscal and physical health of
the entire development into which you're buying.
Conforming mortgage rules for condos
The majority of homebuyers use "conforming"
This means that their loan
purchased by one of two government-sponsored entities -- Fannie Mae or Freddie
Mac -- and that the loan meets the two group's minimum standards.
Fannie Mae and Freddie Mac use the
term "warrantable" to describe condominium projects and
properties against which they'll allow a mortgage. See: https://www.fanniemae.com/content/guide/selling/b4/2.1/01.html
Condo projects and properties
which don't meet Fannie Mae and Freddie Mac warrantability
standards are known as non-warrantable.
Non-warrantable condos are more
challenging to finance.
Typically, a condo is considered
Common non-warrantable properties
include condotels, time shares, fractional ownership properties, and other
projects which require owners to join an organization, such as a golf club.
Manufactured housing projects and
other developments which are not legally considered real estate are also excluded
from warrantability. These include house boat and motorhome projects.
When buying a condo, ask your real
estate agent or lender about the building's warrantability before you go any
A warrantable condo typically gets
you lower mortgage rates than a non-warrantable condo. Warrantable condos
create lower risk for the bank.
PREMIERE MORTGAGE SERVICES INC.
11 Malvern Hill Rd
Sterling, MA 01564-2829
License Number Broker MB1498
Dunbar Bain NMLS #18699
Licensed by the State of New Hampshire Banking Department- License Number
5430-MBR Premiere Mortgage Services Inc. NMLS #1498 is a licensed broker and
not a lender. We arrange but do not make loans.