Condominiums are deemed as the new perfect and most peaceful way of living for a reason. It provides the residents with a community, safety, security and fewer responsibilities at a much lowered cost.
Each condo is built is a set of guidelines, instructed and approved by the government-sponsored enterprises, Fannie Mae and Freddie Mac. These condos are then known as Warrantable Condos, as lenders consider financing a mortgage for these condos to be risk-free. Therefore, these condos are always deemed as the safer and more favorable choice as interested buyers will have close to no issues if they would wish to buy or sell it.
So What Is A Non-Warrantable Condo?
Non-Warrantable Condo, as the name suggests, is the opposite of a Warrantable Condo. It is a condo built on rules which do not quite follow the provided guidelines by Fannie Mae and Freddie Mac. For this reason, Fannie Mae and Freddie Mac have deemed these types of condos to be a risky-business.
But How Will I Know If My Condo Is Warrantable Or Non-Warrantable?
As a Non-Warrantable condo is a risky property, this is a common worry shared by all interested buyers: How will I know if the condo of my interest is warrantable or non-warrantable? Well, here are a few ways in which you can know. Most condo realtors, lenders or even the condo management office have resources available on the the specific condo which can help you discern if the condo is non-warrantable. Moreover, you can always feed the condo’s name, location and status into specific databases which will list if your condo is warrantable or non-warrantable.
Have Your Heart Set On A Non-Warrantable Condo?
Checking through the files and the databases, have you just realized that the condo you have your heart and soul set on is actually non-warrantable? Well, if you’re still interested in buying it, here are a few cons that you should be aware of before your purchase:
The Troublesome Buying Process
As Fannie Mae and Freddie Mac have deemed the condo to be risky, you will not be qualified for a conventional loan or mortgage. Instead, you will have to qualify for a bank’s portfolio loan instead. This means that there is a really high chance of you having to put down a large down payment in order to obtain the condo.
The Troublesome Selling Process
Most potential buyers are aware of the different between a warrantable and non-warrantable condo. They are also aware of the many cons that non-warrantable condos carry, which is why, if you should wish to sell the condo, the pool of home-buyers will be very limited for you. As most potential buyers are looking into condos for their affordability, they might not have the funds needed to take out a portfolio loan in order to obtain the condo.
The Final Decision..
The final decision, after a great deal of research and contemplation, rests with you! It is always better to consult experienced or professional individuals in order to understand exactly where you stand and where should you aim to go.