Buying a condo is a lifestyle choice. Those who do choose to live in a condominium unit instead of say a single family home appreciate the advantages a condo can provide. For instance, there are no lawns to mow. The property manager takesCondo Slip-Ups care of maintenance issues. Additional amenities might include a workout facility, a swimming pool or entertainment rooms. Condos are typically located in higher density population areas near shopping and entertainment and when compared to a single family home the price per square foot is less expensive with a condo. But there are some things that can knock down a mortgage request fairly quickly if certain issues are discovered.

One of the most common reasons a mortgage lender rejects a loan application for a condo is owner-occupancy. Just as a mortgage lender might require a larger down payment and raise interest rates for an investment property compared to an owner-occupied one, if more than 50% of the units in a project are rented, the mortgage lender might politely decline the opportunity to finance the purchase.

Another deal-killer might happen if one entity owns at least 10 percent of the units. For example, if there are 250 individual condo units and one person owns 25 or more, a lender might decide not to lend. If this person who owns 25 units ever got into some financial trouble and had to let all 25 units go, suddenly the project has 25 foreclosed properties.

There are rules that condo owners must follow and these rules are laid out in the Covenants, Conditions and Restrictions, or CC&Rs. These rules are made available to potential buyers for review but sometimes these rules are a bit heavy handed. If you’re assigned a specific parking spot and mistakenly park in the one next to yours, not only could you be towed but you could face a fine. Patio furniture on the deck? The CC&Rs may prohibit outdoor furniture or make sure there are no more than two chairs and a table.

Finally, if there are any current lawsuits filed by or against the homeowner’s association, the lender will want to make sure and pending litigation is settled before a loan can be placed. If for example a lawsuit is filed against the complex and the complex loses it’s possible the individual owners can be charged an additional assessment to cover legal fees which could affect affordability.

Condos have their advantages but there are some things potential buyers need to be on the lookout for when considering a condo purchase. Just work closely with your real estate agent and let your mortgage lender know in advance which condo you’re considering. Mortgage companies will have to approve each condo project before placing a loan but it’s also possible the lender has previously approved the project and getting financing won’t be any different than any other type of property.