In the condo buying process in Miami, a real estate professional is the starting point yet it is also important in the initial stage to consult a mortgage lender. Source of funds should be in place before viewing properties. If not buying cash, then financing is needed; knowing below adjusts expectations and smooths the process.
#1 Proof of Funds Necessary
A statement of either bank account balance that reflects funds to satisfy list price or pre-qualification from a lender is standard to schedule showings. Clarity of liquidity or approved loan amount affords a focused search by list price and even condo building.
#2 Decide Cash vs Bank vs Direct Lender
Cash is the most favorable negotiation for lower selling price. Main street institutions such as Bank of America, Chase, Wells Fargo et al. may not be able to finance loan due to a limited number of and more restricted, standard, nationwide products of which many condo buildings do not meet requirements. Direct lenders are able to be more flexible with credit and income profiles, customize based on circumstances, and underwrite loans for condo buildings that do not meet requirements for increased fees. It’s best to work with a local contact even if the bank or direct lender is national as they have knowledge of specifics for the city of Miami and condo buildings.
#3 Down Payment Possibly Above 20%
Although there is an oversupply of condo inventory, owners generally demand conventional 20% offered. However, if condo building does not meet requirements or if a limited review process is elected, down payment will be higher. The market has been trending 25% - 35% for down payment. New development condos do not accept loan financing for initial deposit or first 50% of payment schedule.
#4 Association Approval Required
The condo building will go through full or limited review. It may not be approved most times due to not meeting specific requirements for ownership rules and HOA conditions.
#5 Federal Programs Limited Acceptance
VA financing is accepted by few condo owners and registered approved for few buildings. While FHA is a financing term more readily accepted, it is still limited. New development condo developers do not accept federal programs.
Please contact me to discuss more.