Building Condition Critical to Buying Potential
We always hear about what Chicago buyers need in order to get financing from lenders – good credit, adequate down payment, sufficient income – but many lenders also look at how a Chicago condo building itself measures up before doling out a home loan to a qualified buyer.
So what are some of the things you should look out for when it comes to buying a unit in a Chicago condo building? According to recent reports, some banks and mortgage companies have become wary of condo buildings with a large percentage of renters, insufficient association reserves, homeowners who are delinquent in paying their monthly assessments and pending litigation issues. Any or all of these situations could make it more difficult for ready and willing buyers to purchase in certain Chicago condo buildings.
One of the main reasons lenders are apprehensive about giving out loans to people trying to buy in these buildings is how it affects their ability to sell the loan to government-sponsored agencies such as Fannie Mae and Freddie Mac. Condo buildings with unstable financial footing or lawsuits underway may not live up to federal agencies’ standards for loan backing. This is a concern for lenders and can be a frustration for buyers.
Likewise though, buyers may not want to purchase real estate in a building that has these types of problems because it can lead to hardship down the road. Low reserves could mean a large special assessment when a major repair springs up unexpectedly; association fees could increase to cover the deficit caused by delinquent assessments; and renters may not care for and take pride in properties as their homeowner counterparts do, which can result in conflicts among neighbors.
Along with finding Chicago properties that suit your needs and wants, you may want to focus on condo building that are in good standing as well. It will save you time and money now, and possibly help you avoid some headaches in the future.