I thought I would share this inquiry I received from Zillow.com.
I was asked if it was a good time to buy a new construction condominium. If you’re thinking the same, here’s what I shared with this First Time Home Buyer.
Buying a condo requires a lot more “homework” than does buying a single family home, here are some of the Pros and Cons.
Pros
- If you are a qualified First Time Home Buyer, you may be eligible for the $8000 Federal Income Tax Credit, provided you close before November 30,2009 (extended to June 30, 2010 but you have to be in escrow by April 30.)
- If you are purchasing in Riverside County (CA) you may also be eligible for the special Riverside County Tax credit (check out our posts on the Riverside County programs)
- The usual benefits of condominium living still apply (little to no maintenance required) and the prices are usuallly lower than single family homes.
Cons
- If it is new construction, the State of California is no longer taking reservations for the $10,000 stat home buyer tax credit.
- Unless the project is FHA/VA approved you will be required to make a down payment of 20%. (The salespeople should know this).
- In order for you to close by November 30, the project will have to have met it’s presale requirements. Right now it’s 51% of sales have to be to owner occupants. That may go to 70% if Fannie Mae gets her way.
- If it is an existing project be sure to check the percentage of owner occupants vs. tenant occupied. If there are too many tenants, you will in effect be buying an apartment which will be very difficult sell in the future.
- Be sure to check on the financial health of the Homeowner’s Association. If it is a new project and the builder/developer still controls the HOA, if he goes under so does the HOA and there goes all the amenitites you would have been paying for. If there are a large number of foreclosures in the complex, it means not many HOA dues are being paid which is a recipe for disaster.
If the condo lifestyle is something you’ve dreamed about, now can be a very good time to buy IF do your homework!
IT’S TOO IMPORTANT…DO IT RIGHT!
Tags: help for first time homebuyers, loans for first time home buyers