3 Mortgage Mistakes When Buying a Condo

Condo units for sale

Condo units for saleDespite the large number of desirable Corpus Christi, Rockport, and Key Allegro homes, many people prefer to buy condominium units. After all, as Rockport Properties, Inc. explains, condos usually provide a better view, help eliminate property maintenance nightmare, and are located in the heart of the city.

However, you might be surprised that it’s trickier to secure the right financing and get the unit you love. Here are some of the most common condo mortgage mistakes first-time buyers make:

Snagging the Lowest Rate

Compared with traditional mortgages for freestanding properties, condo loans tend to come with higher interest. Lenders consider condos to be riskier since units could lose value easily when other residents default on their loans. In turn, lenders would most likely have stricter conditions or restrictions in place. Unless you put down about one-fourth of the unit’s cost, your interest rate could be 0.25 higher than what you’d pay on a single-family house.

Being Unprepared for a Large Down Payment

Considering that condos are risky assets to lenders, you might be asked to pay for 25% of the property’s price upfront to secure financing. Condos may cost less than freestanding houses, but being able to borrow less money to buy the property can put a damper on homeownership.

Then again, most lenders look at the entire package when granting loan requests. Even if you want to buy a risky asset, you might be asked to put down as little as 5% if you have an excellent credit score.

Forgetting About the Building’s Occupancy Rate

Most condo mortgage providers would require a certain number of units to be sold first before offering to finance. If you wouldn’t have enough neighbors when you move in yet, your loan application may be denied.

Buying a condo has its unique challenges, but the risks are worth taking when it makes perfect sense for your situation. Exercise your due diligence to choose the right unit — not just based on its location, but also on the building’s management. Make sure you’re on good financial footing before you buy to ensure you could keep up with the payments associated with condo living.