Though it’s been talked about quite a bit in recent years, the idea of a condo loan still confuses many people especially those who’ve never taken out a mortgage before. To help you figure out what exactly an executive condo loan is and whether or not you need one, here are the top things you should know about them.
1. Condo loans are very much like regular mortgages
Like all types of mortgages, a condo loan is a financial arrangement that helps people buy or build their dream home. It’s also exactly what it sounds like: a mortgage that’s used to fund the purchase or construction of a condominium unit and, if you qualify for an equity line of credit (ELOC), can also be used to fund renovations while the unit is being constructed.
2. Executive condo loans can be more flexible than other types of mortgages
As with all mortgages, there are many variables that go into deciding whether or not you qualify for a condo loan. Your credit score, the kind of condo and unit you want to buy or build and your financial situation � for instance, how much money you plan to invest into the property (this can include your down payment, mortgage down payment and other financing sources) � are some of the factors. But if you meet a specific income requirement and if your financial situation is stable, then executive condo loans could be the best option for securing the financing you need.
3. Condo loans are easier to qualify for than you might think
You don’t need a certain level of income to qualify for a condo loan. But there is a minimum income requirement. If you meet this requirement and have minimal debt and a solid credit score, then you should be able to qualify for a condo loan. While your financial situation will matter, it’s not the only thing that goes into determining whether or not you can get a condo loan. Your credit score is crucial as it determines whether or not you can get approved for a certain mortgage rate or if your mortgage broker will refer you to a different lender altogether because of your credit score. If you’re planning on borrowing a significant amount of money from your mortgage, it’s important to check your credit score beforehand so you know what kind of mortgage rate you qualify for and the lender who will have the best rate for you.
4. Condo loans can be used with other financing sources
As mentioned above, executive condos loans are mortgages and because of this, they can be used in conjunction with other types of financing like home equity lines of credit (HELOC), second mortgages and cash. But executive loans can also be used by buyers who don’t have many other financing sources available to them, for instance, the buyer who has a good job but wants to buy a luxury condo unit and doesn’t have enough money saved up for a down payment. If this is the case, the seller of the condo could finance you.
5. Condo loans aren’t just for high-value condos
While they were originally used mostly in negotiating deals on high-end units in luxury buildings, these days executive condos loans can be used on all kinds of condos � even your typical one that doesn’t fall under the luxury category.
Learning how executive condo loans work can be a good way to determine whether or not one is the best option for your particular circumstances. If you have any questions about them, please feel free to contact me, your mortgage broker at Capital Direct Financial.