As I drive around Ramapo, I see massive construction. I see large buildings that have multiple doors and I would (if I wasn’t in my line of work), naturally come to the conclusion that these are multi-family properties with many rental apartments. The truth is, many of these properties are actually Condominiums.
What is a Condominium? A condo is a form of property ownership in which each owner holds title to his/her individual unit, plus a fractional interest in the common areas of the multi unit project. Each owner pays taxes on his/her property and is free to sell or lease it.
In plain English, each of the units in the large multi family structure is actually owned individually and once the sponsor, or the developer has completed construction and sold a specific percentage of the units, the management of the whole condominium project is turned over to a Home Owners Association formed and governed by the homeowners of the condominium and they determine monthly cost per unit to maintain the common areas and the insurance.
Condominiums can look like apartment buildings. They can look like garden apartments or like town homes or “row housing”.
When banks look to finance a property there is a whole different set of rules for condominiums. Firstly, the bank is very interested in information about the condominium development, for example, how long has it been a condo? How long has it been since the homeowners are controlling the Home Owners Association? How many units are in the development? How many of the units are owner occupied vs investor? Does any one investor own more than 10% of the total units? Are any of the homeowners behind in their monthly fees and are there any lawsuits pending against the development?
There are restrictions on minimum down payments allowed, and some financing is just not allowed at all on some condominiums. Most difficult to finance are small developments with 2-4 units, units with accessory apartments, and new construction.
If you are considering purchasing a Condominium, especially the small 2-4 units that are cropping up all over our community, and of course the larger new construction developments, it is very important that you ask the right questions and have your mortgage financing in place before you proceed.
If you have any questions regarding any mortgage issue, contact Ann Zeilingold, Branch Manager of First Meridian Mortgage Corp. Licensed Mortgage Banker NY, NJ, CT, PA banking departments. 1609 Route 202, Pomona NY 10970. 845-354-9700
No comments:
Post a Comment