First time homebuyers in Temecula, murrieta and other portions of Riverside and San Diego Counties are seeing the prices on condos reach a level, where the monthly payment on their first time home would be more than they are paying for rent.
So is now the time for a First Time Home Buyer to buy a condo for their first home?A condominium is very often the first home of choice many first time homebuyers in Temecula, Murrieta, and other portions of Riverside and San Diego Counties. The price, the locations, the amenities, the low upkeep all make condos a very attractive alternative to single family homes, but there are some landmines out there, so watch your step.
In a previous post I mentioned some of things to keep consider when buying a condo as your first home.
Here’s some updated information you’ll need if a condo is your choice for your first home. Unless you are a first time homebuyer with sufficient savings to pay cash for your first time home, the financing of your first condo has gotten more difficult.
Available inventory is the least of your worries. There are plenty of units available whether it be a foreclosure (REO) or a short sale, but getting financing is a “whole other story”.
At first you may think the “guidelines” for first time condos are keeping you from owning your first home, and they are but those guidelines are designed to protect your interest and the interests of the lender who will be financing your first home purchase.
Here are some highlights:
1. The majority of the units in a condo project (usually 60%) have to be occupied by owners. If it’s less, you would be buying in essence an apartment, and you likely live in one already.
2. No more than 15% of a condo project units can be more than 30 days delinquent on HOA dues. If the other owners aren’t paying their HOA dues, they will be looking at you to make up the shortage.
3. A requirement that borrowers must now obtain a condo-owners insurance policy unless the master policy provides interior unit coverage; coverage may not be less than 20% of the assessed value. Most condo association master policies don’t cover contents, so this would be an added expense to your monthly payment.
4. The homeowners association must have at least 10% of its budgeted income designated for replacement reserves and adequate funds budgeted for the insurance deductible. If the homeowner’s association cannot cover operating costs, new condo owners could expect to see a string of assessments just to pay the daily operating costs.
It’s not hopeless for Temecula first time homebuyers who are thinking about a condo as their first home, but it’s caveat emptor (buyer beware). Make sure the Realtor you are using is aware of these changes, otherwise you’ll be facing an uphill climb on a very “slippery slope”.
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