People ask us the same condo FAQ’s (Frequently Asked Questions). So, here are the most popular questions – with replies.
What is a homeowners association (HOA)?
The HOA is a non profit organization. The HOA’s function is to maintain the common areas of a condominium or “Planned Unit Development”, also called a “PUD”. These common areas typically are the open areas, clubhouse, pool, tennis etc. Homeowners are allowed use of these common areas.
In addition, the HOA usually, but not always, supplies services to cut the grass and remove snow (once the accumulation reaches a certain point, usually 2″ or more. Many also provide for garbage and recycling pick up. If ownership of the homes is condo style, the HOA usually is responsible for the exterior maintenance of the buildings, including the roof. However, since each association is different, we urge you to check before you purchase.
All of this is funded by each unit owner paying a fee to the association to cover the costs.
One of the many condo FAQ’s is about financing the purchase. Many condo complexes have gone through the process to get approved for FHA Financing, which allows for low down payment financing. However, the process is time consuming and can be costly. As a result, many associations are not FHA approved. However, there are options. Other mortgage programs exist which allow qualified borrowers to obtain mortgages with similar, low down payments. Additionally, new FHA guidelines allow for possible “spot approvals” for purchases in non-FHA approved complexes.
Conventional Financing requires a typical 20% cash down payment. With at least 20% down, you’ll avoid paying mortgage insurance, which can easily top $100 per month.
Another option is The First National Bank of Dad – possibly your family can help you out.
Condos FAQ’s – Closing Costs
In New Jersey, closing costs typically are between 2% to 3% of the purchase price. This includes legal fees, bank charges, title insurance and more. However, the closing costs will be less if you are paying cash for the property. Many HOA’s levy a one time buy in fee to the association. If so, this would increase the closing costs by that amount.
Are you ready to buy or sell a home?
If yes, call us – Bunny and Art Reiman – Realtors. Because, whether you’re buying or selling, we can service you with the highest levels in real estate expertise and professionalism. Hundreds of our clients have allowed us to guide them through the process of buying or selling their home. And we can provide the same services to you!
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