In case you haven’t noticed, Boise’s downtown area is experiencing an unprecedented construction boom with at least 7 major projects under construction or in the planning stage in the downtown core alone. Boise Planning Director Hal Simmons attributes this surge in part to the Great Recession. He believes it refocused attention back to the downtown. And this trend is playing out in larger cities across the Pacific NW and West.
If you’re thinking of downsizing and getting rid of the lawnmower and paint brush, there’s never been a better time to consider buying a downtown condo. Yes, it’s a lifestyle change and one you have to carefully plan for, but the payoff can be huge. Everything is within a few blocks of you…restaurants, espresso bars, theaters, shopping, sports venues, and upscale markets, to name a few. However, you need to do your homework and be prepared for some challenges along the way.
The biggest challenge is that condo mortgages are tougher to get than traditional homes. The “Housing Opportunity Through Modernization Act of 2016” was touted as a law that would dramatically improve long-fought restrictions on FHA financing for condominiums. Its intent was to change FHA condominium rules and make it much easier to get condo projects certified by FHA, giving Realtors more options for clients looking to purchase a condo with an FHA mortgage. However, to date that simply hasn’t happened.
Lenders impose a different set of rules on you when you buy a condo. They may sometimes require a larger down payment and charge you a higher interest rate. The majority of homeowners typically get “conforming” mortgage financing when they purchase a home. This means that their loan meets Fannie Mae and Freddie Mac - government-sponsored agencies who purchase a lot of loans - minimum standards. These agencies use the term “warrantable” to identify condo project against which they’ll allow a mortgage. Those projects that don’t meet their standards are labeled as “non-warrantable,” and non-warrantable condos are harder to finance.
Is your heading spinning yet? If so, don’t worry. You just need to find an experienced Realtor and mortgage lender who have “been there, done that” to help guide you through the maze. You can purchase the condo you desire AND get reasonable financing if you choose your team - your Realtor and lender - wisely. Don’t be afraid to interview them and ask them about their experience in successfully closing condo transactions. Remember, you may suffer some short-term inconvenience to condo ownership, but in the long run it’s worth it!
Kelly McCune
208-914-5724
kmccune@atova.com