The first question to ask when reviewing condo association financials

Condo lending rules are changing. We recently covered the details, but here's the short version: to qualify for a conventional loan, most condo associations will need to set aside at least 15 percent of their monthly budget for reserves — up from the current 10 percent. (Listing photo courtesy of Step Inside Media.) This number has real consequences for both buyers and sellers. So whatever side of the transaction you're on, this should be the first question you ask when you sit down with a set of condo financials: What percent of the monthly budget goes toward reserves? If the answer is below 15 percent, it could mean the association isn't yet positioned to qualify for conventional financing — which matters differently depending on where you sit: If you're buying: a low reserve percentage could decrease your financing options, or require the association to make changes before your loan can close. It's worth asking early, before you write your offer. If you're selling: the same shortfall could limit your buyer pool, or slow down your sale while the association catches up. Getting ahead of it — before your condo hits the market — can save you a lot of stress later. The good news is y...