When buying a Florida home, the first step is generally to obtain a loan to finance the transaction. The many mortgage lenders out there vary in their requirements, but few go so far as to evaluate the health of a residential community’s Homeowners Association (or Condominium Association) unless the borrower seeks an FHA loan (a government mortgage backed by the Federal Housing Administration) – until recently.
As the economic fallout continues, I have found that most mortgage lenders (at least those doing business in Florida) are becoming increasingly conservative. Many now condition their Florida loans on the solvency of the respective HOA. And although this precaution makes it much more difficult for potential home-buyers to obtain financing, it also protects them from bad investments. How? Where a single residential community experiences a number of foreclosures, its HOA loses its source of funding and thus cannot maintain the upkeep of the abandoned homes or condos. This in turn reduces the property’s value, making it a less favorable investment for the buyer.
So, while mortgage lenders’ heightened caution may cause you problems in the short term, you will likely thank your lucky stars for it in the long run.
If you are interested in learning more about this topic, you can either post a comment to this blog, contact me, a Broward Real Estate Lawyer, by email, or call me at (954) 458-8655 and I will be happy to answer your questions. I offer a free initial consultation.
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