Purchase | Refinance

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Condo Loans

We cannot stress the point enough: it is imperative that clients work with a condo mortgage expert in order to navigate a sometimes difficult transaction. Condos, although they can be financed with every loan type available, have very intricate requirements that are based on the property itself and how it is managed. The Hargrave Group works with some of the top developers and condo focused agents in the area, so we start mapping out financing at square one, setting up with pre-construction sales financing.

There are very few lenders who truly understand condo financing and here at LoanPeople we have a team with over 40 yrs of condominium experience, knowledge and a Leader that sits directly on the Condo advisory board. Our condo team is dedicated to making the reviews of the project just as smooth as any other type of loan. The Hargrave Group has a Condo Department to not only work with end-users, but also help guide builders, developers, and realtors in the early stages of construction. This allows these business clients to be ahead of the game and to ensure that their property is able to obtain financing when construction is complete. Ask us about our Zero % pre-sale product to help your developers start selling as soon as they have our unit complete.

Condos present a great option for homebuyers who want the affordability and low maintenance that are sometimes difficult to obtain in the present housing market. We often see a lower price per square foot than single family homes and an abundance of new construction in the Dallas area. It is helpful to understand the condo loan financing process. Just like any other loan, there is an approval process with a down payment requirement, credit check, and full personal profile.

In addition, condo loans are required to have a review of the property itself and the condo association that manages the shared amenities. Monthly or quarterly dues that go into a fund that maintains the property are not required, however having a balanced budget and reserves in line are necessary for those projects where are borrower may have to put less than 10% down when purchasing an owner occupied unit. Things like shared swimming pools, parks, and structural insurance are all maintained with funds that come from monthly condo dues paid by homeowners.

Our condo department will review these budgets to be sure that the funds are being used appropriately and not being mismanaged, as a requirement for obtaining a condo loan. One more thing to determine as soon as you have identified a condo you would like to purchase is whether the condo is warrantable or non-warrantable. This is an extension of the requirements in the last paragraph but is very helpful to your loan originator in order to place you in the appropriate condo loan.

A non-warrantable condo is a condominium property in which the loan is not eligible to be sold on the secondary market; our condo team will review the project in depth before saying no, most of the time exceptions can be made with Fannie Mae and/or Freddie Mac with compensating factors, this is where our condo department is extremely knowledge on how to get that exception approved.

Freddie Mac and Fannie Mae have established criteria when it comes to evaluating condominium developments. Conversely, a warrantable condo loan can be sold to Freddie Mac or Fannie Mae. Many times, the warrantability of a development is the deciding factor for many lenders, and can have a large impact on whether or not your loan will be approved. A good loan doesn’t make a project eligible.

If you fall in love with a condo property that is deemed non-warrantable, don’t stress. The Hargrave Group has many condo loan options for properties that are non-warrantable.

Here are our top tips for purchasing a condo:

  1. Choose the right lender – All lenders aren’t created equal in the world of condo lending. Just because a bank says they finance condos doesn’t mean that they can finance the condo that you want to buy. Choose a lender that specializes in condo financing. LoanPeople has zero overlays when it comes to condominium underwriting.
  2. Know if there are any pending litigations, special assessments or deferred maintenance up front to avoid all risks or possible non warrantable projects.
  3. Select the proper insurance – Condo master policies cover the exterior of the home, but you are responsible for covering the interior contents.
  4. The amount of coverage that is required for a borrower to obtain is always determined between them and the insurance company.
  5. Research your building’s reputation –Like any other neighborhood of single family homes, condo communities have reputations, too. Partner with a realtor who specializes in condos, and can advise you on market desirability for each property.
  6. Understand configurations – Condos can have numerous floor plans within the same square footage. Consider both future plans and short-term goals when choosing a layout.