Rather than move out of their condos and into single-family homes when they need more space, many homeowners are opting to purchase the adjacent condo with plans to combine the space into one home. Before you start picking out flooring, however, here are two things you need to do first.
Check with the Condo Association
You may have big plans for a supersized condo, but you have to run the idea by your condo association first. Some HOAs don't have a problem with it as long as the new home is up to code and registered with the local government. Others, however, may prohibit combining condos for specific legal reasons.
For instance, taking a condo out of inventory may throw off the ownership numbers and make it harder for buyers to get certain loans. For example, FHA requires at least 50 percent of the condos in a community to be occupied by the owners. Taking one of out inventory could reduce that percentage to an unacceptable level, resulting in disqualification from the FHA loan program.
Look through the bylaws and talk to the HOA to make sure you can legally combine the homes. Don't be disheartened if you can't at that time. Things change and the rules may be relaxed in the future, or you may be able to find a workaround at a later date that lets you create the home you want.
Talk to a Bank Rep
In addition to purchasing the second condo, you'll need money to make the necessary renovations to turn the two apartments into one cohesive home. Financing all of this may be a little tricky, especially if you already have an existing mortgage on the condo you already own, so you'll need to get some help determining which mortgage product best fits your needs.
For example, if you want the bank to include the renovations with the mortgage, then you might have to get a construction loan rather than a regular home mortgage. A construction loan provides money for materials, labor, and other items required for the renovation but often have higher interest rates than regular loans.
Even if you have enough savings to pay the renovation costs out of pocket, you still need to finance the purchase of the second condo. Since you'll be combining the two properties, you have to make sure you get a loan big enough to pay off your existing mortgage and cover the price of the new condo.
If you're not sure which lender is the best option for this project, connect with a real estate agent who can point you in the right direction.
For more tips and advice on buying condos for sale and combining them, contact a local real estate professional.
