Insurance requirements on Condominiums is the next focus of my series on the FHA first time home buyer loan.
This week, I will be taking a quick minute of your time to touch on something I find many home buyers and realtors are not aware of.
As of December 7th, 2009 there is a new insurance requirement for condominiums if you are using an FHA loan:
“FHA now requires HO-6 (or what’s termed Walls in Insurance) in cases where the master (HOA) policy does not include interior unit coverage, including replacement of interior improvements and betterment coverage….”
To make a long story short this coverage is akin to renters insurance. FHA requires that the coverage be no less than 20% of the unit’s appraised value. The big question is assuredly, how will this affect my monthly payment?
To use a recent quote that I took a look at on a condo valued at $175,000, 20% would be $35,400, and the yearly estimated cost came out to $336 or $28.00 a month. Twenty eight dollars is not much for the added piece of mind and it’s required by FHA.
Just another little tidbit that I feel you need to keep in mind when looking into purchasing a condo with FHA.
This often over looked requirement is one that doesn’t cost much but it can definitely throw a transaction for a loop if you as the buyer are not aware that it is required. We’ve touched on it before but it can’t be said enough, this is another reason why you should work with a great and competent realtor as well as a great and competent loan officer. There just is no substitute for a knowledgeable team working for you.
There are so many intricacies to the loan programs today and the most exciting part of that is there are more piled on daily. My goal at Broadview Mortgage is to educate and empower our buyers, so stay tuned as I continue to keep you in the loop with the requirements of the FHA program and the changes.
If you have any questions about a new home refinance or purchase, or if you would like a second opinion about a scenario you are in now, feel free to give call me on my cell phone at 949-422-0857 or email me at MarioB@BroadviewMortgageCorp.com