Jan

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Condominium

Filed Under mortgage, real estate 

Condominium - A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

For many first time home buyers, a condominium is an ideal starter home.

An individual condo owner holds title to the condominium unit only, not the land beneath the unit, so condos can be stacked on top of each other.

Despite being similar, town homes or townhouses are not considered condos. They are considered an attached single family residence or a planned unit development.

Condos serve as a great purchases for someone who doesn’t have a large family and doesn’t want the burden of cleaning or the maintenance that a larger home requires.

Condos are classified as high rise, more than five stories, and low rise, less than five stories.

On most condo projects a home owner association has been established to maintain the grounds and common areas.

Condominiums typically require slightly higher homeowners association dues to pay for insurances that are required and up keep of amenities and common areas.

For a mortgage loan secured by a condominium unit to be eligible for delivery to Fannie Mae (FNMA) or Freddie Mac (FHLMC), the condominium project must be approved by FNMA and FHLMC. In order for a condominium development to be accepted, it must meet certain requirements promulgated by Fannie Mae and Freddie Mac. Some of the more important requirements are, the minimum number of units already sold, the number of owner occupied units and units being rented in relation to total number of units in the development, and if any one investor holds title to more than a certain percentage of total units.

Condominium boards often require an interview with a condo buyer to ensure the potential occupants meet their requirements. Some of the condo boards’ criteria are the occupant’s family size and income situation.

The Condominium Market is booming across the United States. Apartments are being converted into condominiums in record numbers and prices continue to rise. This phenomenon is being met with mixed emotions by some. On one hand it reduces rental units available for those not financially capable or interested in home ownership. On the other hand it is argued that Condominiums aid many buyers in getting in on entry level home ownership.

A great way for young adults to get started buying their first home is by using the FHA “Kiddie” Condo Loan Program. This type of mortgage allows a person to co-borrow with a blood relative (e.g. parent, grandparent, sibling, etc.) who helps qualify for the loan using their income or assets. Both borrowers take title to the property and sign for the loan.

One advantage to owning a Condo is not having the requirement for a survey to be done.

Some lenders will consider a mortgage loan secured by a condominium to have more risk than a loan secured by a single family residence. In this case, the lender will charge a slightly higher rate of interest for the condominium loan.

This is an ownership where the owner gets title to a unit, in a multiple dwelling plus a proportionate interest in some of the common areas.

Some financial “gurus” have advised against this because you are turning unsecured debt into secured debt. While this is basically true the fact is that defaulted unsecured debt can be secured against real property very quickly once the debtor is sued for it and a judgment is received.

In order to decide if a debt consolidation is your best action, you should figure what you are paying now and how that will translate in the length of time it will take you to pay off those credit cards. You may find that rolling those debts into your mortgage will save you thousands of dollars in interest payments.

A mortgage agent can help you decide if refinancing credit card debt into a mortgage is your best option. Using financial calculators available, they can compare how long and how much it will cost you to pay off credit card debt using your current monthly payments vs. refinancing the debt into a new mortgage. Very often the monthly and lifetime savings is large.

One major difference between unsecured (e.g. credit card) debts and secured (e.g. mortgage) debt is should a financial disaster arise, such as health issues, or lose a job, and a homeowner defaults on unsecured debts, he can file bankruptcy protection and keep the home, whereas if he defaults on mortgage payments, he would be forced into foreclosure.

If you are planning on selling your home in the near future, you may want to rethink consolidating. You need to make sure that you have enough equity to pay for realtor’s commission and down payment or closing costs on the new home.

If you have gotten buried in a hole with credit card debt it could be a necessity to refinance your home and pay off your credit card debt. It has been known to save thousands of dollars. On the other side of the spectrum, if you only have 5 months left on a credit card bill it is note wise decision to bury that into a mortgage.

You can consolidate your credit card debt through use of your first mortgage or by obtaining a second mortgage or a home equity line of credit, also known as a HELOC. A HELOC works with the same basic principals of a credit card. It is a revolving account that as you pay the equity line down, you have that money available to you to use again. With a second mortgage you simply have a set term (5 years, 10 years, 15 years, etc…) that you will pay on the loan for and when it is paid off you are relinquished of your obligation to this debt and the account closes. All 3 (1st mortgagee, 2nd mortgage or HELOC) are excellent choices for debt consolidation but you and your mortgage broker will need to figure out which one makes the most sense for your particular situation.

Consolidating credit car debt into your mortgage can save a homeowner hundreds and sometimes even thousands of dollars per month by lowering their total monthly obligations. When you consolidate credit cards into your mortgage you also are able to lower your interest rates on those credit cards which essentially saves you a lot of money but you are able to write off the interest on your tax returns from your mortgage and you can not do this with your credit cards.

If you want to use a refinance loan to consolidate some of your debts, you’re going to have to borrow more than the actual amount remaining on the loan that you’re refinancing. This additional amount will be used to pay off those debts that are being consolidated and will affect the monthly payment of your refinanced loan. By doing this, however, you can make your finances and outstanding debts much more manageable and will likely become debt-free much faster.

When deciding to refinance for debt consolidation you might want to consider how long you will have to pay your credit cards if you are only making the monthly minimums. This can take you much longer in most cases than paying on a traditional 30 year fixed mortgage.

Other sites: Mortgage Broker | Investor Loans | Reduced Documentation Loans | Fixed-rate mortgage | Increasing your homes value | Why should I refinance | MIP | Rehabilitation mortgage | VA| Pay Option Arm Calculator

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