Cape Coral Florida Real Estate

I have posted a long time ago about buying Condominiums in Florida, but I need to refresh the information.

 Primary residence and second home condo purchases are treated quite differently. The reasons for this are many and entirely too convoluted to go into. Suffice it to say, it just is the way it is, end of story.

1) There is no Private Mortgage Insurance (PMI) currently available in Florida and the local lenders have all but stopped doing second mortgages for any properties, let alone condos. That means you'll need 20% down for a primary residence condo purchase. And, if you are buying the unit as a second home, you might as well accept the fact you're going to need a 30% down payment.

• The only way around the above down payment requirements is to go with an FHA loan. Just be aware that they are only applicable to primary residence purchases. FHA does not provide financing for second home purchases.

2) Fannie Mae and Freddie Mac have completely overhauled their criteria for approving a condo complex for financing. Your only hope is that the complex can qualify for a limited review status. Anything else and you are basically SOL. This is especially true here in Florida, as the new guidelines now require condo complexes to have reserves for their catastrophic insurance deductibles. Very few, if any, condo complexes currently have such reserves in place.

• Existing condo complexes cannot have 15% or more of their total units currently in default on their assessments (30 days or more late).
• The condo complex is limited to no more than 49% of its units being second homes or investor owned (rentals).
• The complex can have no pending litigation.
• No weekly rentals, check in desks or daily maid services are allowed. These types of units are strictly viewed as condo hotels and are not eligible for financing.
• Hazard insurance is required of all units in the condominium and the coverage must include contents (walls-in) insurance for each individual unit.
• Complexes are ineligible for financing where a single entity (the same individual, investor group, partnership, or corporation) owns more than 10 percent of the total units in the project.
• Appraisers must supply the pertinent condo information letter data on the appraisal form under the Project Information section and it must be complete. Many complexes, on the advice of counsel, are still refusing to give out any such data, especially the relevant rental information. If you can't get it, you're SOL again. Therefore, we strongly recommend you attempt to get the condo information letter filled out by the management company first, even if you have to pay a fee. Knowing what you're getting into beforehand can save you a lot of problems and embarrassment as the approval process moves forward.

While this was not meant to be an exhaustive list of things you can run into when trying to obtain condo financing, it does cover what we see as being some of the major issues. The best advice we can give you is to do your homework upfront, otherwise, you may be in for some major hair pulling before things are said and done.

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