Friday, December 10, 2010

Condo refinancing: tricky to impossible

Way back in April of 2010, my partner Chris wrote a piece about how condos were doing in the Great Recession. This was after much discussion between the two of us. The piece was long, well reasoned and thoughtful. It was also long. We’re both sometimes guilty of over-writing. <smile>

Essentially, Chris’ piece reminded buyers that when you buy a condo you’re also buying the neighborhood and the HOA. If the HOA or your individual neighbors have financial troubles, you could too.

If more than 51% of your condo community isn’t owner-occupied housing – it’s a vacation home, or a rental – then you might have a very hard time refinancing your condo mortgage, even if your income and credit is great. Same thing with past-due HOA fees: if more than 15% of the condo owners in your community are late on their dues, you probably won’t be able to refinance your mortgage.

Couple days back, the gloomy bloggy giant Housing Doom published a much shorter piece about condos that essentially warns the same thing.

Condos make a great investment for many types of buyers – especially first time home buyers, retirees, vacationers and single professionals – but they’re not for everyone. Buyers should understand that when there’s a recession, condos have historically taken a bigger hit to values than detached housing. You need a Realtor, maybe even an attorney and financial advisor to help you make the decision to buy or not buy a condo.

Do you need a Realtor? A Realtor who knows a lot about the condos in the North and West regions of Metro Phoenix? You’re in luck! I’m that Realtor. If you’re thinking about buying a condo, give me a shout.