5 Things to Know for Condo Financing in Ocean City, MD
Many buyers need a mortgage to buy a home or condo in the Ocean City, MD real estate market. For those that aren't able to buy with cash, it's important to be prepared for the tricky side of condo financing. In this article I'll share 5 things every buyer needs to know about basic financing options for buying a condo in Ocean City, MD to help make your condo search easier.
How much you'll need for your Down Payment?
If you're buying a condo in Ocean City, MD, you'll most likely need at least 10% of the purchase price as a down payment for a mortgage loan. Depending on the building, you could need as much as 20% of the purchase price. Some mixed use buildings require higher down payments.
If you put less than 20% down, your lender could require more disclosure from the condo association and documents from the resale package. The condo association budget is a factor lenders really consider and take a hard look at.
Read my blog article "How Much Mortgage Can I Afford (with a $1,200 Mortgage Payment)" to get my helpful resources to estimate your monthly budget with a mortgage. READ MORE
What you need to know about Mixed Use Condo Buildings?
There are many mixed use condo buildings in Ocean City. Some buildings have commercial retail space on the lower levels, or they have businesses owned by the developer which generate revenue.
Mixed use buildings can sometimes affect your financing or could result in alternative financing from a specialized mortgage lender.
How Condo Association Fees factor your eligibility?
There are over 1,100 condo buildings in Ocean City. Most of them have condo association dues. Generally, condo association dues cover maintain costs of the building and master insurance policies for the building. Every association is different, and you have the right to review documents related to the association as a contingency to your contract.
However, the association fees can increase your mortgage eligibility, especially if you're on a budget. The average annual condo association fees are $2,000-$3,000. This could add few hundred dollars a month to your expenses, which could affect your mortgage to income ratio.
Read my blog article "5 Reasons Buying a Condo May Fail Due to the Condo Association" to learn more about things that could affect your mortgage loan. READ MORE
Do you buy as a Second Home or Investment Property?
If you're planning on buying a property for vacation rental income, you'll need to consider the type of loan you'll buy the property with. You'll either buy for a second home or an investment property. Investment properties tend to have higher interest rates compared to a second home loan.
To get a second home loan, you'll need to occupy the property for a certain number of weeks throughout the year. This can be easy to achieve, since the Ocean City, MD vacation rental season is primarily May through October.
Read my blog article "What Properties Make the Best Ocean City, MD Vacation Rentals" to learn which properties to search for your next vacation rental purchase. READ MORE
Why you need to consider a lender experienced with condo financing?
Buying a condo with a mortgage isn't as simple as buying a single family home with a mortgage. What makes condo financing in Ocean City more difficult is the fact that this is a coastal resort real estate market. Many condo buildings are geared to entertain vacationers and families. If your lender from home isn't experienced with condo financing, be cautious.
Many condo purchases have fallen through because the lender wasn't experienced with the process and often result in re-applying for a loan with someone more experienced. Many local mortgage lenders are familiar with the area and the buildings here. This makes for a soother process, and can save time and money.
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