When is a Townhome not a Townhome?

When is a Steamboat townhome not a townhome? When it’s a condo, of course!

If that doesn’t make any sense, you are not alone. When it comes to financing a Steamboat townhome or condominium, the lender’s underwriter decides how a property is classified. I recently worked with a buyer who purchased a place that looked like a townhome.   It had several levels, a front door, a garage in front, and common walls on the sides.  The first lender said “this is a condo and we won’t finance it.”

The second lender said “this is a condo and we will finance it, but you’ll have to put more money down and pay a higher interest rate.” The third lender said “this is a townhome and we are happy to finance it.”

Same property.  Same buyer (with excellent credit.)  Different underwriter.

Some of the things underwriters look for when they classify a development are:

  • Is there any land included with the purchase?  If there isn’t, the townhome is technically a condo built on the development’s common area.
  • How do the governing documents classify the property?  If any of the CIC documents (Articles of Incorporation, etc.) use the word ‘condominium’, there is a good chance your townhome is a condo.

In Steamboat, places like The Enclaves, Quail Run, Mustang Run, Saddle Creek Townhomes, Eagle Ridge Townhomes, etc. could go either way depending on the lender.

Please call us at 970-846-8284 for more information about purchasing Steamboat condos and townhomes.