Thinking About Buying a Santa Cruz Condo? What You Need to Know

Posted by Lauren Spencer on Wednesday, February 3rd, 2010 at 9:25am.

If you’re thinking about buying a Santa Cruz condo, it’s imperative that you know what you’re getting into, and how the past year has changed things. The rules and regulations for condominium mortgages have changed a lot in 2009…

In April, the two government-run mortgage companies, Fannie Mae and Freddie Mac, tightened their guidelines for those looking to own a Santa Cruz condo or any multi-family home. The restrictions make it harder for potential buyers to get financed through Fannie Mae and Freddie Mac, which makes a mortgage more expensive.

The April policy requires that the condominium association and operations be evaluated, as well as your credit qualifications. The new requirements touch on subjects such as:
• The association’s insurance
• Financial statements
• Status of dues receivable from those living in the condo
• Who owns what units
• How many units are empty

If the condominium you’re looking at doesn’t come back with a good report, you may have to go to a private mortgage insurer. Unfortunately, private insurers are becoming even pickier; some have quit covering condo mortgages all together. To be able to get a loan, even with good credit, you may end up paying as much as 40% down to get mortgage payments you can afford.

Even if the condo is approved, however, you’ll still need to come up with 25% or try government financing. Fannie Mae and Freddie Mac say it doesn’t matter what your credit score is. If you can’t pay 25% or more in the down payment, you’ll end up with a three-quarter point add-on penalty - $750 for every $100,000 borrowed. What’s the penalty for? Not buying a “traditional,” single-family home.

What’s the moral of the story? If you want to buy a Santa Cruz condo, spend more time researching than you normally might. Look for those that have at least a 50% occupancy rate. Find out if the occupants pay their dues, and if one person owns more than 10% (a big “no deal” for the two mortgage companies). Good condos are out there and available, but the rules make buying a hard game to play.

If you’re looking for a great condo that qualifies for Fannie Mae/Freddie Mac financing, I can help. Call me at 831.662.6522 or email me at for more information.



Tightened their guidelines

Private mortgage insurer

Three-quarter point add-on penalty

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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