Condominium purchases are much different than single family home purchases. There is more information to assess before purchasing condos. This article provides condo purchasing guidance for Philadelphia first time buyers.
Condo – Defined
Condominiums are properties with two or more units sharing land and other common areas. Exterior areas belong to the association and each owner retains a percentage interest in that. The exact percentage is predetermined in the association paperwork. Condo owners are financiallyresponsible for repair of the interior of their own units but share the cost of common areas such as siding. Because of the common spaces and fees, it is critical for Philadelphia buyers to obtain condo documents ahead of time.
Facts You Need to Find Out About
Using Different Loan Programs
Mortgage programs will only provide loans on units in qualified complexes or based on certain criteria. For example, FHA requires certain owner occupancy rates, sufficient reserves, and a variety of other items. Condo complexes that are not or cannot obtain FHA approval will have a smaller buyer pool. Buyers using FHA should find out whether a complex qualifies before getting too far invested.
Owner Occupancy
Every complex will contain a certain number of rental units. High owner occupancy rates are more likely to meet financing requirements. Owner occupants also tend to take better care of their units.
Reserves and Assessments
Most condo complexes implement monthly fees. The fees are for common expenses. A amount is also put into a reserve account to prepare for upcoming repairs. It is helpful for buyers to know how much the condo fee is, what is included, the history of changes, and if it will increase again in the future. Buyers should also ask about the amount of money already in reserve. If a complex does not have enough to cover a significant repair, the amount must be shared among the unit owners. This is referred to as an assessment and can be a lot for owners to cover. Ask about previous assessments and any potential ones.
Rules and Restrictions
The biggest difference between single family and condo living relates to restrictions. Condo buyers should obtain the rules and regulations in advance and make sure the terms are acceptable. Rules can apply to both common areas and interior spaces.
Condo Purchasing Guidance For Philadelphia First Time Buyers
There are risks to buying any type of property, but condo purchases have some added risks that buyers must understand. Carefully read through all facts and speak to a real estate attorney. Also evaluate the resale value of units based on the financial condition of the complex and loan qualification. Contact a real estate agent to provide a report on past sales trends in the complex. Details helps buyers make an educated decision about a condo purchase. This article on condo purchasing guidance for Philadelphia first time buyers was prepared by Diana Escobar-Wachter at Access Abstract Corporation. Contact Diana at 610-461-2910 or wachterd@accessabstract.com for information on a particular complex in Philadelphia or for help with other real estate topics.
