What do Banks Really want to Know about Condos Prior to Approving a Loan?

Buying a condo now-a-days can be challenging. Why? Because lenders may not loan money to borrowers on just any condo complex. They have to be financially solid and free of litigation. I am in escrow on a condo in Oceanside where the complex has some pending litigation. At first we thought there wasn't a chance to get a loan approved for a buyer, but then after snooping around the internet about the case, I found out there was a recent decision on one of the cases! That was good news. So, we went for it.

What is interesting is that what became a deal maker or breaker was the decision from the lender to approve the complex. The lender ordered what is a called Condo Cert from the property management company for the HOA to make a decision on if they want to approve a loan. I had an opportunity to see the completed Condo Cert and thought it was very interesting and wanted to share it with you.

Here are the key questions that the lender asked:

- Is the project complete or are there additional phases to build out?
- is the project a condo conversion?
- Date when the builder transferred control of the HOA to the owners
- Date when the condos were first offered for sale
- Total number of units
- Number of units currently in escrow
- Homeowner occupancy statistics
- Number of sales in the last 90 days
- How many units are dellinquent in paying their HOA dues?
- Are there any pending special assessments?
- Is the HOA involved in any pending litigation?
- Does the project has sufficient reserve dunds to pay for maintenance?
- Are there any special restrictions such as age restrictions?
- Are there amenities or facilities owned by the HOA?
- Who takes over HOA delinquent dues if a home is lost in foreclosure?
- Does the project rent on a daily, weekly, or monthly basis?
- Does the HOA has insurance?

These are the main questions that is asked of the HOA. There were a few more. But, you can see how carefully they evaluated this condo complex prior to approving it for a loan. If you are in the market for a condo, keep these questions in mind before you get your heart set on a home in a complex that may not be approvable.

You can ask you real estate agent if there have been other condos recently sold in that complex that have a loan associated with it. This will be a fast and easy indication of the chances of your loan being approved. If you have additional questions about condo certs or want information about a particular complex please give me a call. Thanks, Crista :)