Financing a condo in Chicago (real estate, insurance, condos)

[elisabethb04]

Hello,

I intend to purchase a condo by September - October 2019.

I want it to be financed. I cant afford to put down the 20 per cent, I know there are other options.

Do you have info on organizations that can help? I am not a first time buyer.

I dont want to go to a bank.

I am just gathering information right now.

Thanks

[damba]

Originally Posted by elisabethb04

Hello,

I intend to purchase a condo by September - October 2019.

I want it to be financed. I cant afford to put down the 20 per cent, I know there are other options.

Do you have info on organizations that can help? I am not a first time buyer.

I dont want to go to a bank.

I am just gathering information right now.

Thanks

Wrong sub-forum. Look in the mortgages/RE forums at C-D. Great advice to be had there.

FWIW, never rule out your current bank or credit union. If anything, just to get the conversation started and figure out how to more easily rule out all options.

Frankly, there’s no reason why you couldn’t just grab your credit report and go see a banker just to get pre-approved. Figure out how much you can borrow comfortably.

[Hiruko]

Originally Posted by elisabethb04

Hello,

I intend to purchase a condo by September - October 2019.

I want it to be financed. I cant afford to put down the 20 per cent, I know there are other options.

Do you have info on organizations that can help? I am not a first time buyer.

I dont want to go to a bank.

I am just gathering information right now.

Thanks

Any mortgage broker will be willing to guide you...

[Bellamouse]

You only need 5% down to buy a condo with a bank. Not sure why you think you need 20%.

[damba]

Originally Posted by Bellamouse

You only need 5% down to buy a condo with a bank. Not sure why you think you need 20%.

What are the caveats/conditions though?

[TBideon]

Mortgage insurance for one.

[emathias]

Originally Posted by damba

What are the caveats/conditions though?

Originally Posted by TBideon

Mortgage insurance for one.

Either PMI (Private Mortgage Insurance), or depending on your credit you might be able to take out a HELOC for 15%. Then at least, unlike with PMI, the interest on it is deductible (at least it used to be, might want to double-check under Trump's new tax laws).

But yeah, wrong subforum, plus instead of talking to strangers on the internet, talk to a mortgage broker.

[coldwine]

You aren't going to want to read this, but you need a real estate agent.

Yes, even for condos.

"Coldwine, why the hell are real estate agents involved in condos? That doesn't make any sense."

Yes, it doesn't make any sense. I completely agree.

However, even as a lawyer, there was so much about buying a condo the first time that I not only didn't know, but didn't have the time to research.

Plus, I'm not entirely certain condo associations are not proof of a grander conspiracy theory. Or at a minimum, some sort of sinister cult. They talk to each other. You want a middleman in there who can do all the ball-busting and speak your demands without you starting out with a bad rep with the ever-present association.

[Bellamouse]

A real estate agent won't be able to help with financing questions. Although I agree it's foolish to buy without a good one who knows the area and knows the condo market there to help, especially as the buyer, since you don't have to pay for the realtor.


That said, with regard to financing, you can put as little as 5% down and pay PMI. You can only do a piggy back loan for a total of 90%, so you'd have to put the other 10% down if you want to do an 80% loan at one bank and a 10% loan at another bank, which avoids PMI. But no one does those anymore because the banks have incentivized doing one loan. The interest rate at 90% with PMI is cheaper than the interest rate for 80% with a 10% home equity line piggy backed on.

If you put 10% down and do just one loan, you do pay PMI, but you can do limited review on the condo building itself (which I suspect is where you have your concerns). They will not have to look at all the decs and bylaws of the building or the budget, etc. They will check some basic information that will be found on the appraisal and check the building's master insurance policy to make sure it has the coverage they require. But that's it.

Guidelines for condo buildings are loosening up. It used to be if one owner owned more than 10% of the units, you couldn't get financing. Now they have raised that figure to 25%. Used to be if there was more than 25% commercial space in the building (say the ground floor had stores in it, etc), you couldn't get financing. Now they allow up to 35%. And the list goes on. But you get the idea. Condo financing is not anywhere near as awful as it used to be. I wouldn't let that scare you one bit.

I work with about 40 lenders and do this every single day.

[doodlemagic]

Not sure what you mean by you don't want to go to a bank and your looking for an "organization"? Are you looking for a hard money lender? If so be prepared to pay 10% to 20%.

FHA only requires 3.5% down but many condos may not be able to be purchased with an FHA loan. You can get a traditional mortgage with as low as 5% down but will have to pay PMI.