How Much Does A Person Need To Put Down To Buy A Condo in Fort Lauderdale?
Seems like a fairly simple question, doesn't it? However the answer really isn't. When it comes to buying a condo, there are often a series of factors that play into the answer. I promise you, I'm not going to write a long article on this topic. In fact, I'm going to give you the answer right now, "It Depends!" To put it simply, it depends on the condo, the purpose of the purchase, and the buyer's income/credit/debt.
All things being equal, if the purpose of buying the condo was to live in it, and the buyer had OK income/credit/debt, and it came down to the condo, this is what we would have to look at. Does the condo have reserves? Reserves is money that has been set aside in case of an emergency or some substantial repair. Think of it as a separate account that you'd set aside in case you ever need to use the funds for something critical. This would mean taking more money out of your salary which means you'd have less to take home and spend. Often times the HOA fee or Maintenance fee for condos like these will be higher, which is why so few condos actually have full reserves. So you're probably asking yourself, so what do reserves have to do with how much money one needs to put down in order to buy a condo? The answer has to do with risk, the risk lenders take when giving money to buyers. Essentially, a condo that has a high amount of $$$ in reserves represents lower risk to the bank that's lending the money because if something catastrophic occurs in the condo that costs a pretty penny to repair, the money is easily covered by the reserves limiting the likelihood of the owner to cover the burden. If a condo has no reserves, the owners would have to shell out the money from their own pocket to cover the cost which could result in future delinquencies from other unit owners. This creates a greater risk for the mortgage company which means buyer's would have to put down a larger downpayment.
To simply put it:
High Reserves = Less Risk = Lower Down PaymentLow Reserves = High Risk = Higher Down Payment
"So what does all this mean in the end?" you ask
With a Conventional Loan and no reserves in a condo a buyer can expect to put down 25-30%. However, if the condo has sufficient reserves (or fully funded), the buyer may be able to put a down payment as low as 3.5% with a conventional loan. Depending on how much the building has in reserves, the downpayment requirement from the lending institution can vary. So you're probably thinking, is there place that I can go to find out which buildings in Broward County (Fort Lauderdale) are fully funded? I'm glad you asked. There are very few in Broward County so I've published a list of those buildings, links to existing listings, price ranges, and estimated monthly HOA dues on my site at www.sassoonrealestate.com/fully-funded . Check it out. Oh, by the way... I'm never too busy for your referrals.