5. Find out how much the seller of the condominium actually owes the lender so you can determine how much to offer for the property.
6. Hire a building inspector to assess the over-all safety of the building.
7. Employ the services of a professional contractor to give an estimate of the repair or rehabilitation costs the unit may require. Under the FHA rules, repairs will cover only the interior of a condominium unit.
8. Apply for a pre-approved loan with an FHA-approved 203(k) lender, as soon as you have a good estimate of how much will be spent in rehabilitating the property. You will have to submit a detailed proposal containing the extent of work to be done. It will include a detailed estimate of every repair or improvement needed on the condo unit to be purchased.The loan amount you will apply for will cover the cost of the condo unit plus the cost of repairs.
9. You will have to ask assistance from your real estate agent involving some requirements of the FHA lender regarding sales contracts required in seeking a 203(k) loan. Immediate submission of the usual documents required for loan processing will expedite the pre-approval of your loan.
10. If everything goes well, and you are able to secure a pre-approved loan, make a written offer to the lender of the condominium unit you are buying. The lender will likely approve your offer if you present the following documents:
• A bank deposit to represent “earnest money", which signifies your serious intention to buy the condominium unit.
• A copy of the pre-approval letter issued by the lender indicating therein your pre-approved loan is ready and the time frame within which you can avail it.
• A comparable list of sales involving condominium units within the area to justify your offer for the condominium unit is reasonable. This should be prepared and certified by your real estate agent.
11. All things considered and the sale of the condominium goes through, the FHA lender will release part of the loan to pay-off the seller's lender to settle the seller's mortgage loan. The remaining amount of the loan, which represents the money to be used for repairs, will be placed under escrow. The escrowed amount will be released only through withdrawal requests made by the contractor, and should be supported by reports showing percentage of completion.
However, bear in mind that there are rules and regulations to observe in the condominium building you'll be occupying. In fact, the benefits of condominium living.depend on the type of person/s who intend to take abode in a condominium building. Aside from the above pointers on how to buy a condo, readers can get additional insights about condo living from a separate article entitled:House vs Condo: Considerations for the Better Investment.
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