My partner's condo is going through some major updates (new roof, and new common HVAC system).
Her unit is being assessed a bill of $38K. Ouch.
She doesn't have a choice in the matter, but she has a choice on how to pay for this. I'm interested in opinions on which payment option she should choose. It is a little bit tricky in my opinion, that is why I'm asking for feedback from this trusted forum.
She also has plans to put this condo up for sale within the next 12 months.
A few comments about this condo:
- It is fairly modern, close to a major downtown, easy access to public transportation, reasonably priced, with low amenities, and with low monthly HOA fees.
The condo HOA plan:
They are taking out a loan for $3M to cover the cost for these improvements, and each unit will be assessed an additional payment until the loan is payed.
The payments are tied to the condo unit, not the person.
If someone forecloses, the condo HOA gets burned for the remaining costs. There is concern that many owners will just foreclose if they have less than this much money invested in their condo.
Payment Plan A:
- Accept an additional $282/month payment. This is a $37.6K loan at 4.85%. That increases the total cost to $67.6K.
- I'm shocked to read this, but they won't let her pay it off early. Something about the loan basically being a fixed loan between the HOA and the finance place.
Payment Plan B:
- She could pay them the $37.6K up front, and skip having this loan tied to her condo. Note: She can afford to do that.
My thoughts:
Reasons to pay it off immediately:
- One of the big selling points of this condo it that it is a fairly nice modern condo that is reasonably priced, and has lower HOA fees.
If she ties an additional $282/month fee onto the condo, it will have a high HOA for this area, and it will be much harder or impossible to sell.
Reasons to go along with the monthly loan payments.
- I suspect most condo owners will take the loan, and it will be reflected in their sale prices. I think they will start selling for $50K less, or not selling at all.
She will want more for her place, because it doesn't have the burden of this loan. So she will be asking more like the going rate, and this will make her unit look expensive, and harder to sell. This makes me think she should just accept the loan, and accept that she is going to get way less for her condo.
Your thoughts on this?
Thanks, JP
Her unit is being assessed a bill of $38K. Ouch.
She doesn't have a choice in the matter, but she has a choice on how to pay for this. I'm interested in opinions on which payment option she should choose. It is a little bit tricky in my opinion, that is why I'm asking for feedback from this trusted forum.
She also has plans to put this condo up for sale within the next 12 months.
A few comments about this condo:
- It is fairly modern, close to a major downtown, easy access to public transportation, reasonably priced, with low amenities, and with low monthly HOA fees.
The condo HOA plan:
They are taking out a loan for $3M to cover the cost for these improvements, and each unit will be assessed an additional payment until the loan is payed.
The payments are tied to the condo unit, not the person.
If someone forecloses, the condo HOA gets burned for the remaining costs. There is concern that many owners will just foreclose if they have less than this much money invested in their condo.
Payment Plan A:
- Accept an additional $282/month payment. This is a $37.6K loan at 4.85%. That increases the total cost to $67.6K.
- I'm shocked to read this, but they won't let her pay it off early. Something about the loan basically being a fixed loan between the HOA and the finance place.
Payment Plan B:
- She could pay them the $37.6K up front, and skip having this loan tied to her condo. Note: She can afford to do that.
My thoughts:
Reasons to pay it off immediately:
- One of the big selling points of this condo it that it is a fairly nice modern condo that is reasonably priced, and has lower HOA fees.
If she ties an additional $282/month fee onto the condo, it will have a high HOA for this area, and it will be much harder or impossible to sell.
Reasons to go along with the monthly loan payments.
- I suspect most condo owners will take the loan, and it will be reflected in their sale prices. I think they will start selling for $50K less, or not selling at all.
She will want more for her place, because it doesn't have the burden of this loan. So she will be asking more like the going rate, and this will make her unit look expensive, and harder to sell. This makes me think she should just accept the loan, and accept that she is going to get way less for her condo.
Your thoughts on this?
Thanks, JP
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