Interest Rates for Hoboken Condos are Low – BUT
In order for a buyer to get the best possible rates, the building must conform to certain Fannie Mae imposed guidelines. So if you are out shopping for a condo, some of the questions you should be asking include:
- Is there any commercial space in the building?
- If so, how much (% of total square feet)?
- Are units in the building rented out or owner occupied?
- Fannie Mae does not want more than 49% rental.
- Is there an ongoing environmental issue? Even one that has been remediated but requires monitoring?
- Has any litigation been brought by or against the condo association?
- Are any of the unit owners delinquent in their maintenance payments?
- Does one owner own more than 10% of the units in the building? Small buildings with only 3 or 4 units always run into this one.
- Are any of the units rented out by the condo association itself? This may be considered engaging in commercial activity.
If any of these conditions exist, it is an issue. If several of them exist, it may be a real problem. They are seen as increasing the lender’s risk and therefore Fannie Mae will not buy the loan. All important questions which a smart buyer will ask up front. Even if exceptions will be made, the interest rate a buyer will pay is likely to be higher than the going rate as a result.