The Condo Checklist
When a lender evaluates a loan application it looks at both the quality of the borrower as well as the property involved. Does the borrower have good credit and can he or she afford the new loan? Is there a down payment and if so, how much? And what about the property are there similar properties in the area? Is the property in good shape and have other properties in the area sold for similar amounts recently?
When financing a condominium, the lender evaluates the property and asks the same questions but also digs a bit further. Condos provide an additional layer of risk to a lender, primarily because the condo owners only own the square footage inside their walls and share ownership with the other owners for all property outside the unit such as sidewalks and laundry rooms and fitness centers.
What questions do lenders ask condominium associations? Typical questions are:
· How many units are there?
· How many units are rented?
· Are more than 15 percent of the monthly dues delinquent?
· Have all phases been completed?
· Are the common areas complete?
· Is there any current or pending litigation?
· Has the developer transferred ownership?
· Does any single entity own more than 10 percent of the units?
· If new construction, how many units are pre-sold?
· Do you have a minimum of $1 million in liability coverage?
· Is there any commercial คอนโด ราคาถูก or retail space in the property and if so, what percentage?
· Are any units available for overnight rental?
This list presents some of the basic questions lenders need answered, other questions include information about insurance coverage, first right of refusal and age of property, among others.
If the answer to any of these questions provides a negative response, such as current litigation or there are other phases or common areas not yet complete, the lender will give pause and hold up a loan approval until their questions are answered. Answered in the wrong way, and the loan might run into some trouble.
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