Why condo refinances have extra steps
When you own a condo, you share the building, the grounds and the costs with other owners. If the association runs into money trouble or a major lawsuit, that can affect the value of your unit. So lenders review the project to make sure it is on solid footing.
What lenders review
- The HOA's budget and how much it holds in reserves
- How many units are owner-occupied versus rented
- How many owners are behind on their HOA dues
- The master insurance policy for the building
- Any pending lawsuits involving the association
- Whether one person or company owns a large share of the units
The HOA questionnaire
Most lenders ask the HOA or its management company to fill out a condo questionnaire. It answers the questions above in one document. Some associations charge a fee and take a week or more to return it.
Ask your HOA how to request one as soon as you decide to refinance. It is one of the most common causes of delay.
Some lenders also want the HOA's current budget, its master insurance certificate and recent meeting minutes. Gathering these early keeps the process moving.
Insurance you'll need
The building's master policy usually covers the structure and common areas. You will typically also need your own condo policy, often called HO-6, to cover the inside of your unit and your belongings. What each policy covers depends on its terms, so review your policy or talk with your agent.
CapCenter's in-house insurance agency can quote condo insurance, and you don't need a CapCenter mortgage to get a quote.
If your project doesn't qualify
Some condo projects don't meet standard lender guidelines, for example because of low reserves or a large lawsuit. That can limit your loan options or change your pricing. Ask your loan consultant what is possible, and whether the issue might be resolved by the HOA over time.
Refinancing your condo with CapCenter
CapCenter finances condos for first mortgages, and refinances come with ZERO Closing Costs (restrictions apply). Pricing for condos can differ from single-family homes. You need a credit score of at least 620 for a CapCenter loan.
CapCenter's home equity loans aren't available on condos. If you want to tap equity, a cash-out refinance may be the alternative.
