If you are thinking about buying a condo in Albuquerque, and you’re not paying cash, you’ll want to check the HUD approved condo list before you start shopping. Why? If a condo is not on the list, it will be difficult , maybe even impossible for you to finance it.
Condos are different from single family homes and townhomes because you are not buying any land when you buy a condo, or even the exterior of the unit; you’re only buying the airspace inside the unit and the right to use it. Did you know that if you have a little patio out the back and a little yard, it’s not yours, it belongs to the association?
One way to tell if a property is a condo, and not a townhome, is the property’s legal description. Here’s an example that demonstrates what I’m talking about. Here’s a legal description for a townhome:
- LOT 18c-3 REPLAT FOR LAS JARDINES SUBDIVISION CONT .0589 AC
The two key bits of information here are the word ‘Lot’ (meaning land), and .0589 AC (acreage).
Now here’s a legal description for a condo:
- Winrock Villas Condominiums Unit 0-5
The key word here being unit. There’s no mention of the lot or the lot size.
Related post: What’s the Difference Between a Condo and a Townhome?
HUD Approved Condo List
What’s this all mean when it comes to buying a condo? It means that you are buying into an association, almost like you were buying a share of a community.
So if you’re getting a loan, the lender is going to make sure that not only is the unit worth what you’re paying for it, but they’re going to make sure the association is in good financial standing by checking the HUD approved condo list. They want to make sure the association is worth buying into.
When HUD looks at a condo project, the things they look at while deciding to approve the condominium project include the percentage of units that are non-owner occupied (rentals), and the cash reserves of the association to make sure they are financially strong.
Click here to see the list of FHA Approved Condominium Projects.
Oh, and one more thing, the association must have their paperwork in order. They must have made application for approval, and they must have renewed it when it was due. Surprisingly, they don’t always do this.
Condos Look Appealing Online, but…
Condos can look really appealing online, especially the inexpensive ones, but when you combine the difficulty getting financing, the potentially large down payment that may be required (lenders may require considerably more down payment than usual), and the sometimes high HOA fees (which may or may not include utilities and property taxes), nothing could be further from the truth.
I think I should add one last thing. Some of the newer condo projects over the last few years like 100 Gold, The Place in Nob Hill and others, sometimes line up financing alternatives to normal loans through a chosen financial institution, but that’s not always the case.
by Albuquerque Real Estate Agent Rich Cederberg, eXp Realty (505) 803-5012.