Thinking About Buying a Chattanooga Condo? What You Need to Know


If you’re thinking about buying a Chattanooga condo, it’s imperative that you know what you’re getting into, and how the past year has changed things. The rules and regulations for condominium mortgages have changed a lot. It does not matter if you are looking at The Pinnacle or Bridge View.

In April of 2009, the two government-run mortgage companies, Fannie Mae and Freddie Mac, tightened their guidelines for those looking to own a Chattanooga condo or any multi-family home. The restrictions make it harder for potential buyers to get financed through Fannie Mae and Freddie Mac, which makes a mortgage more expensive.

The April policy requires that the condominium association and operations be evaluated, as well as your credit qualifications. The new requirements touch on subjects such as:

  • The association’s insurance
  • Financial statements
  • Status of dues receivable from those living in the condo
  • Who owns what units
  • How many units are empty

If the condominium you’re looking at doesn’t come back with a good report, you may have to go to a private mortgage insurer. Unfortunately, private insurers are becoming even pickier; some have quit covering condo mortgages all together. To be able to get a loan, even with good credit, you may end up paying as much as 40% down to get mortgage payments you can afford.

Even if the condo is approved, however, you’ll still need to come up with 25% or try government financing. Fannie Mae and Freddie Mac say it doesn’t matter what your credit score is. If you can’t pay 25% or more in the down payment, you’ll end up with a three-quarter point add-on penalty – $750 for every $100,000 borrowed. What’s the penalty for? Not buying a “traditional,” single-family home.

What’s the moral of the story? If you want to buy a [city] condo, spend more time researching than you normally might. Look for those that have at least a 50% occupancy rate. Find out if the occupants pay their dues, and if one person owns more than 10% (a big “no deal” for the two mortgage companies). Good condos are out there and available, but the rules make buying a hard game to play.

If you’re looking for a great condo that qualifies for Fannie Mae/Freddie Mac financing, I can help. Call me at 423-488-1882 or email me at tclose@realtycenter.com for more information.

Keyword/Tag:  Chattanooga condo

Links:

Tightened their guidelines

http://www.mortgageloan.com/condo-owners-may-be-denied-mortgage-financing-3030

Private mortgage insurer

http://www.nytimes.com/2009/03/01/realestate/01Mort.html

Three-quarter point add-on penalty

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/15/RE3F15Q74A.DTL

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