Condo Financing Becoming More and More Difficult in MD, VA and DC

Condo financing is getting tougher and tougher these days.  There are many different aspects to condo financing that come into play.  First is how much of the building is owner occupied vs. investment properties.  Ideally, you want at least 75% owner occupied if not more.  If its less than that, you run the risk the condo may not be warrantable, and therefore tough to get financing on.  This issue often comes up with new constrution condos because a lot of investors tend to look at condos for opportunities.  Also, if a lot of the units haven't been sold, it could cause issues.

Another issue that comes up with condo financing is interest rates.  Condo's often time have rate bumps depending on your loan to value ratio.  Most condo owners should be prepared to either take a higher rate, or pay at least 1 point on your loan.  This bump is passed down from Fannie Mae and Freddie Mac as a risk based pricing adjustment.  Since condo's have a higher forclosure rate, and a condo association can go out of business, Fannie and Freddie find condo's to be riskier and pass that risk on to the borrower in the form of higher rates, and/or points on the loan,  Make sure your loan officer knows how to handle condos before you get too far into the process, this way you know your loan will close with the rate and fee's you expect.

Want to speak with a loan officer who knows about condo financing?

more on condo financing?

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