Condominium -
A form of ownership in which individuals purchase and own a unit of
housing in a multi-unit complex; the owner also shares financial responsibility
for common areas.
Despite being similar, townhomes or townhouses are not considered
condos. They are considered an attached single family residence
or a planned unit development.
Condos serve as a great purchases for someone who doesn't have
a large family and doesn't want the burden of cleaning or the maintenance
that a larger home requires.
Condos are classified as high rise, more than five stories, and
low rise, less than five stories.
On most condo projects a home owner association has been established
to maintain the grounds and common areas.
Condominiums typically require slightly higher homeowners association
dues to pay for insurances that are required and up keep of amenities
and common areas.
For a mortgage loan secured by a condominium unit to be eligible
for delivery to Fannie Mae (FNMA) or Freddie Mac (FHLMC), the condominium
project must be approved by FNMA.
A great way for young adults to get started buying their first
home is by using the FHA "Kiddie" Condo Loan Program. This type
of mortgage allows a person to co-borrow with a blood relative (eg.
parent, grandparent, sibling, etc.) who helps qualify for the loan
using their income or assets. Both borrowers take title to the property
and sign for the loan.
One advantage to owning a Condo is not having the requirement for
a survey to be done.
Some lenders will consider a mortgage loan secured by a condomimium
to have more risk than a loan secured by a single family residence.
In this case, the lender will charge a slightly higher rate of interest
for the condominium loan.
