New Construction Condo Unit Mortgage Loan

1 Reply

I recently put an offer to a new construction unit in the West Town area in Chicago and I am in a stage of negotiation. It is a three units building and the builder says the delivery will be in 30-45days. I put an offer to unit #2 (80% done), and the other units #3 and #1 are still under construction and aren't sold yet.

In this case, how does the lender appraise the unit? Does the lender need to appraise the whole building or the unit that I will buy? Does that make me get a bad mortgage rate? Would being a first buyer out of three-unit building be a bad idea?

@Hae Sun Yi , I'm glad you're asking this question upfront because many lenders will struggle with this scenario if they're not comfortable with condo financing.  On new construction, lenders like to see a certain amount of "presale" (IE, under contract) and/or units closed.  In this case, if you're the only one under contract and would be the first to close (called, "First-In"), you will need to work with the right lender to get it done...and to get the right rate.  Some lenders might be able to get it done, but at higher rates.

I don't necessarily think being the first buyer is a "bad idea" as long as the developer puts out a good product, you're paying a fair price, etc.  The area is certainly great, and depending on the price/product I suspect those other 2 units should sell not too long after.  But of course, I'd need to know more about the project to advise in more detail....

All the best with it!