Purchasing a condo in the Boston area is a very smart choice for homeowners who want to be in the city, and don’t want the upkeep and maintenance a single family home presents. Condos often offer residents the use of common areas and amenities such as a gym or pool. According to The Warren Group, the price for medium priced condos in the Boston area have fallen 21% from January of 2011 to January of 2012, while condo sales have increased over 12 % in the same time period. This is good news for homeowners thinking about purchasing condos in Boston proper and in the neighborhoods of South End, West End, North End, Beacon Hill, Back Bay, Waterfront, Chinatown, Leather District, Midtown, Fenway, and Bay Village.These are the neighborhoods which have seen the biggest decrease in prices and increase in sales in condos priced between $500,000 to $700,000.
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With condo sales on the increase, homeowners should be aware of the difference between warrantable condos and non warrantable condos. Under Fannie Mae and Freddy Mac’s guidelines, a warrantable condo is a unit for sale in a complex that is complete, common areas insured, has the majority of units occupied, a Homeowners Association which has been effect for some time, and less than 10% of the units are owned by one person.Homeowners should expect to get better terms on a loan for warrantable units since lenders consider these types of units a more secure risk.
Non warrantable condos are still a good choice for homeowners. In a new building the condos may not meet Fannie Mae and Freddie Mac’s qualifications for a warrantable condo. Depending on the building or complex, homeowners may be able to secure a condo in a new building at a better price because of the fact the unit is non warrantable. For a condo to be non warrantable it must not meet the three levels of qualifications and management of the building or complex must fill out a questionnaire from Fannie Mae and Freddie Mac to determine if the units are warrantable.
The FHA also approves loans for warrantable condos. There is an on spot approval process homeowners can access if the condo they are interested in is not on the FHA approval list. The criteria for the FHA is very similar to Fannie Mae and Freddie Mac’s. The complex must be complete with no plans of expansion, the homeowner association must be in control of common areas, appropriate insurance on the building, common areas, and facilities must be in place, and at least 50% of the units in the building must be sold along with a 51% occupancy by owners for the units already sold.
Knowing the difference between a warrantable and non warrantable condo will help potential buyers know their options in regards to securing a loan. While lenders usually look upon warrantable units as a better risk, condo buyers should shop around and find the best option for their situation. The condo market in the Boston area is still very healthy, and with prices dropping buyers would be smart to consider a condo when looking for a new home.