Condos offer a great alternative to traditional homeownership with benefits like lower maintenance, community amenities, and desirable locations. Yet, some potential homebuyers are hesitant to explore condo financing, often due to common misconceptions that it’s more difficult than securing a mortgage for a single-family home.
While applying for a condo loan may come with a few additional steps, it is far from impossible—and with the right lender, the process can be just as smooth as buying a traditional home. At Supreme Lending, our dedicated condo team ensures that every detail is managed so you may close your condo loan with confidence.
How Condo Financing Differs
When you apply for a traditional home mortgage, lenders typically focus on the property itself and your ability to repay the loan. With condo financing, there’s an extra layer of complexity since you’re not just purchasing the condo unit, but also buying into a shared community. Therefore, lenders will not only consider your credit score and financing profile, but also review the condition and management of the condo complex itself. These factors include:
- Homeowners Association (HOA). Lenders review the financial health of the condo association and the condition of the overall property to rule out any potential risks.
- Occupancy Rates. Lenders may also look at how many units in the building are owner-occupied versus rented to meet certain lending criteria.
- Legal Requirements. It’s important to know that the condo complex isn’t facing any potential legal or regulatory issues that may impact financing.
- Insurance Requirements. Lenders often require specific insurance coverage for the building and the association.
These additional checks and balances make condo financing more detailed, however it’s in your best interest, too. Let’s clear up these three common condo financing myths.
Myth #1 – Condo Loans Are Too Complicated.
While the condo loan process considers more factors than getting a mortgage for a single-family home, it’s not as complex as it may seem. When applying for the loan, you’ll simply need to include general details about the condo, including the address. At Supreme Lending, our condo team takes it from there to review the property. There may even be an option for a limited review, which involves less verification and paperwork.
Myth #2 – Condo Underwriting Takes Too Much Time.
When underwriting a condo loan, lenders review the condo HOA’s financial statements, bylaws, insurance policies, and reserve funds to ensure the property is a sound investment and isn’t deemed high risk. With the additional steps in condo financing, people may think the process takes longer. That’s where Supreme Lending’s dedicated condo review team comes in to help to move the process along quickly, helping to avoid delays.
Myth #3 – Condo Financing Is Riskier for Buyers.
Potential homebuyers may believe that securing financing for a condo is riskier than a traditional home loan. This may stem from concerns about the condo’s association or worries of shared ownership. However, the thorough review process when applying for a condo loan actually provides buyers with peace of mind that their condo community is financially sound and in good standing.
Ready to Finance Your Condo?
At Supreme Lending, we’re dedicated to providing a wide range of loan programs to help people achieve their dream of homeownership, including condo financing. Don’t let these mortgage myths steer you away from your dream condo. If you have any questions or need assistance, contact us today!