Financing a Condo? Think Creative!

By: Allison Millar, Contributing Writer
In: In the news
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If you’ve got your heart set on a condo for Christmas (…or early next year), be prepared to jump through a few hoops to get financing. You need to make sure your credit score is in good shape, more so than in years past.

The downturn in the market has made mortgage lenders leery of the condo market, particularly in newer buildings with low occupancy. Can you blame them?

What’s the Deal With Mortgage Lenders?

Many mortgage lenders have taken a bath in bad loans, so they are being extra cautious about which loans they approve. They also realize that until the job market stabilizes, a good credit score is only part of the picture.

Condos That Make the Grade

The news isn’t all bad, however. Condos remain a good investment, as long as you pick the “right” one. Think location, good space, and no lawn to cut. If you’re in the market, here are three ways to boost your chances of financing a condo:

  1. Look at older buildings, which tend to have fewer restrictions than new construction. In many markets, the upside is character. Crown molding. Cozy room configurations.
  2. Make sure the condo association is in good health and people pay their assessments on time. The mortgage lenders are tracking this info and may reject the loan if too many people are falling behind. Besides, you want to know that the association has funds for necessary repairs.
  3. Increase your downpayment. I know it’s difficult, but even going from 10 to 15 percent can make a difference. If you can muster 25 percent, the prospects of approval are much higher.

Getting a mortgage is a lot trickier in today’s market, so you have to get creative. Not creative financing, of course. Just creative thinking! Here’s to happy condo hunting.

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  1. One Response to “Financing a Condo? Think Creative!”

  2. Dec 18, 2009

    Another option is to get a condo association loan for your community property. Also known as HOA loans, these loans are based on condo association cash flow from dues instead of property as assets.

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