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A great majority of properties in Florida have lost value during the past few years due in part to the glut of available properties for sale and not enough qualifying borrowers available. One of the hardest hit properties are the condos in South Florida, particularly in the tri-county areas of Palm Beach, Broward and Dade counties. As a result there are many bargains that can be snatched at in the 100’s and even well below $100K. Although the properties may be widely available, the financing is not as easy as it once was.

Conventional lenders for the most part don’t want to lend on condos and when they do, they require hefty down payments of 20% or more, and that’s for owner occupying properties. If the condo is an investment, be prepared to pay upwards of 5 points in discount points plus closing costs. Therefore, other than paying cash for it the most practical way to obtain financing is through and FHA loan. Whether you are a realtor representing a buyer for a condo, or just a private individual interested in purchasing one, it would be to your advantage to consider the following facts before deciding to make an offer or obtain financing on a condo:

• First and foremost find out if the condo is already on the list of approved condos from the HUD website here. If the condo is not listed in that website, it does not necessarily mean that it will not qualify.
• Some lenders will not consider financing at all any condos that are not already on the HUD approved website. But some lenders offer what is called a “spot approval” during the loan process. This is a basic checklist or questionnaire that the home owner’s association(HOA) completes during the loan process. However, the lender can still reject the condo depending on the information provided by the HOA. And the HOA charges a fee for completing the questionnaire which means that the buyer would have paid anywhere between $100 and $200 to complete the questionnaire, just to find out that the condo does not qualify.

What can you do then? Here is what we recommend:

• First make sure that the condo you are thinking or buying is a good value. Your realtor can verify this for you from previous sales. Otherwise you can check online yourself from our useful links page yourself.
• Call one of our advisors and provide the condo address and name so we can verify the eligibility information for you.
• We can provide you a copy of the questionnaire FREE of charge to you. Call the HOA and ask if they will complete the questionnaire for free before even making an offer. If they won’t then ask then if it’s OK that they answer a few critical questions over the phone for you. We can tell what those are. If they won’t even do that, you need to decide if you want to take the risk and pay for the questionnaire or just move on to another condo.
• If they did complete the questionnaire or they at least answered some key questions, provide it to us so we can review it and tell you if the condo would be approved.

Taking the above steps and doing your home work ahead of time will avoid a lot of frustration, as well as time and money wasted down the road.