A loan for condos with 5% down might disappear!

I was reviewing what subjects people were looking for when they came to my blog and far and away the most popular topic was whether they could buy a condo with 5% down.  As a reader, you’re probably even wondering if you should invest in a condominium at all because of rumors that a condo is not a good investment.

First, I need to define what a condo is in Irvine California, as well as Southern Orange County, California.  Many relocating to the area are accustomed to condos being only ‘stacked’ living, or one unit directly on top of another.  In Irvine and Orange County, condominiums can even be detached homes.  Typically, even town homes are referred to as ‘condos.’  The label has more to do with the way the builder designated the unit when it was built, than it does the type of property it is and the rest has to do with some (important) legal mumbo jumbo.

What I’ve noticed is, if you buy a Condo in an area that contains a lot of condominium units, for instance, in Irvine’s Woodbridge Association, where a greater than 50% of the properties are condominiums; then they tend to hold their value as well as detached homes.  I have also noticed a much longer time on the market to sell a condo in Laguna Niguel, for instance, where there are far fewer condominiums.  In Irvine, when a property has all the same aspects as a detached, single family residence; except it’s attached, you might see a price difference of about $100,000.  What you need to understand in this circumstance is you’ll also be selling it for about $100,000 less.

Another not well known fact is that lenders charge about an 1/8th of a point higher interest rate for a condo. In most cases, that does not affect the payment by that great of an amount and when property values are in the range they are here in Southern Orange County, it enables buyers to purchase more space for a more affordable price in a highly desirable area with a highly rated school system wherein all four of its high schools are rated in the Top 10 in the State; and, Irvine is typically listed in the Top 10 safest US cities for its size.

Another factor about which a condominium buyer needs to be aware has to do with FHA purchases or non-cash purchases, especially in the lower price ranges throughout Orange County, CA. It will be much more difficult to get a loan if there is a large area home owner’s association delinquency, a large number of non-owner occupied homes, etc.  These condos tend to sell for cash if they do not qualify for low down purchases. On the other hand, you may want to consider whether a purchase in this area is a smart move. If you require more information on this, be sure to contact me at 949-929-6343 or visit my website and email me by clicking here.

Going back to the initial question of your ability to buy a home with 5% down or less, depends first on your lender and second on your FICO (credit report) scores.  This is why FHA loans are so popular; but you need to keep the issues above in mind.  Unfortunately, the amount down currently allowed to purchase a home or condo might be about to change. The government is considering enforcing a nothing less than a 20% down rule. You’ll need to stay informed through this Blog by signing up below to receive an email notice of new blog postings.

As always, I look forward to your comments or questions!