Posted on: 29th Jan, 2009 01:01 pm
Are the rates on loans for condos higher than single-family homes?
There is no simple, across the board answer to your question.
Condo rates are normally the same as rates for SFR.
I many states/areas today there are often higher down payment requirements for condominiums.
Condo rate could be a little higher with a specific lender if that lender believes they are riskier to do and charges for the risk.
The biggest difference is usually in the size of the down payment, not really in the interest rate, but, anything is possible becasue any lender can price as they see fit.
Condo rates are normally the same as rates for SFR.
I many states/areas today there are often higher down payment requirements for condominiums.
Condo rate could be a little higher with a specific lender if that lender believes they are riskier to do and charges for the risk.
The biggest difference is usually in the size of the down payment, not really in the interest rate, but, anything is possible becasue any lender can price as they see fit.
My bank lady told me today that condo rates are always higher. I'm putting down 20%.
Once again, any lender can do anything they want to do.
Your bank lady is probabaly quoting you that bank's policy correctly.
Check with someone else.
That bank obviously has their own policy.
How big a difference is the rate for the condo than it would be for a SFR?
Also, in what state is the condo located?
Your bank lady is probabaly quoting you that bank's policy correctly.
Check with someone else.
That bank obviously has their own policy.
How big a difference is the rate for the condo than it would be for a SFR?
Also, in what state is the condo located?
I would suggest that you speak to a broker as well. When you walk into ONE bank than you are limiting yourself to what THAT bank has to offer. A broker works with many banks and will find the best deal for you based upon your scenario.
Typically condo rates are the same but many banks are being careful about funding condos. Some are staying away from condos in FL or condos in developments that have less than 10 units.
Typically condo rates are the same but many banks are being careful about funding condos. Some are staying away from condos in FL or condos in developments that have less than 10 units.
i've never heard of there being different rates for condominiums as opposed to single family homes. as john pointed out, of course, there might be restrictions on condo lending, which would have an impact on the pricing of a loan. by pricing, i mean what it costs you to get a particular rate.
also as noted, your loan lady may very well have an inferior product to work with. by all means, shop around.
also as noted, your loan lady may very well have an inferior product to work with. by all means, shop around.
HE'S RIGHT. mY BROKER JUST TOLD ME THAT RATES FOR A CONDO ARE DIFFERENT. I was advised to put down 25% and my rate would go down from 5.125 to 4.875 with one point. So, yes, the rates are in fact more.
guest, your broker telling you to put 25% down doesn't mean that it being a condo made a difference. the down payment made the difference in the rate.
I think Fannie Mae and Freddie Mac have recently made changes for condo loans, such that you may have to pay points if you are getting a mortgage on a condo and you do not have at least 25% down.
Some text from a website...
Condo Mortgages Seen As "Risky" and Will Cost More April 1, 2009
If you're looking to purchase a condominium with less than 25% down payment, it's almost a safe bet that government financing will be the way to go. On April 1, 2009, conventional financing for condominiums will be more expensive:
Applicants who seek to buy a condominium and cannot come up with a 25% down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score, simply because they are not buying a traditional detached, stand-alone home.
Both Fannie Mae and Freddie Mac say they are tacking on these fees to counter higher risks and losses associated with certain loan products, buyer equity stakes and credit scores. Declining home values in many parts of the country are intensifying losses for both companies when loans go to foreclosure.
Freddie spokesman Brad German said some of the loan categories and credit risk combinations targeted in the latest round of fees "default at four to eight times" the rate of other mortgages in the company's portfolio. "We have to manage these risks appropriately," he added, and that means pricing them based on the probability of higher losses.
Some text from a website...
Condo Mortgages Seen As "Risky" and Will Cost More April 1, 2009
If you're looking to purchase a condominium with less than 25% down payment, it's almost a safe bet that government financing will be the way to go. On April 1, 2009, conventional financing for condominiums will be more expensive:
Applicants who seek to buy a condominium and cannot come up with a 25% down payment will be hit with a three-quarter point add-on penalty, no matter how high their credit score, simply because they are not buying a traditional detached, stand-alone home.
Both Fannie Mae and Freddie Mac say they are tacking on these fees to counter higher risks and losses associated with certain loan products, buyer equity stakes and credit scores. Declining home values in many parts of the country are intensifying losses for both companies when loans go to foreclosure.
Freddie spokesman Brad German said some of the loan categories and credit risk combinations targeted in the latest round of fees "default at four to eight times" the rate of other mortgages in the company's portfolio. "We have to manage these risks appropriately," he added, and that means pricing them based on the probability of higher losses.
With certain banks, I have seen pricing adjustments that are greater for condos than for SFR's as the LTV increases. Not all banks, but some of them are doing that.
you are correct, looking2. our across the board add-on is .75 up to maximum ltv of 97. yeah right, as if any mi companies will do a 97 ltv loan. and yes, i thoroughly agree that fha is the way to go.
do lenders in FL require a 25% downpayment in order to finance a condo?
I am a first time home buyer looking to take advantage of the market and the 8K rebate. I found a property (loft - (condo) and it's a fantastic deal (short sale with a local bank). Unfortunately the developer stuck the HOA with a huge water bill and there is a special assessment through April 2010. Even knowing the details and having the seller's commitment in writing to pay off the entire assessment, no investors will approve it for FHA spot approval. While I can afford to put the required 10% down for a conventional loan, other than avoiding the up front MI, are there any benefits other than a lower mortgage payment? Is the appeal of FHA for my situation - 786 FICO and 140K loan - too great that I should just forget about this property and get one that is FHA-approved? With the recent announcement of no more spot approvals that means I need an FHA approved condo property and none in the area interest me. I am not interested in buying a house at this time and I can't afford a 20% down payment to avoid PMI altogether.
i'm not sure i understand the allure of an fha loan for someone with a 786 credit score - the loan amount would affect nothing, anyway, i think.
with an fha loan, you do not avoid the mortgage insurance premium, and with your credit, mortgage insurance on a conventional loan isn't going to be prohibitively high.
sorry...just saw your noted "while i can afford to put the required 10% down..." - which leads me to believe you are enticed by the 3.5% required by fha.
i don't think you'll get a satisfactory answer from any of us on here and i think that because you've got your heart set on that particular condo, and what you see elsewhere is not comparable, it appears. if this property is that important to you, then i'd opine that you have left yourself little choice.
with an fha loan, you do not avoid the mortgage insurance premium, and with your credit, mortgage insurance on a conventional loan isn't going to be prohibitively high.
sorry...just saw your noted "while i can afford to put the required 10% down..." - which leads me to believe you are enticed by the 3.5% required by fha.
i don't think you'll get a satisfactory answer from any of us on here and i think that because you've got your heart set on that particular condo, and what you see elsewhere is not comparable, it appears. if this property is that important to you, then i'd opine that you have left yourself little choice.
i just purchased a place in NJ and everywhere I went to the condo rates were higher by .25. With that in mind I was a primer buyer with credit score of over 800 with assets, 30% down and a good job. i was told that condos are a greater risk to the lender thats why they hedge their bet with a higher rate.
In some instances yes. However, I am in NJ and I know for a fact that I can get a loan for my customers without a rate adjustment for a condo.