Overview

There are many types of property when you shop for a home. The most common property types, such as single-family homes, condos, and planned unit developments, have subtle but significant differences. A PUD will look like a single-family house to most home buyers. It could be a detached home with a yard and a garage, or it could be all of the other things you want in a single-family home. Although it is a single-family residence, the legal structure of a PUD is closer to that of a condo.

Let's look closer at PUDs and how they can affect the mortgage process.

What Is A PUD?

PUDs can be a group of homes. They can include condos, single-family homes, or commercial property such as retail stores, or any combination of these types of property. However, the most common type of PUDs is made up of single-family homes. A PUD will operate as a condo project. Every homeowner pays monthly or quarterly fees depending on how much they own. The HOA fees, just like condo projects, go towards maintaining amenities and paying for maintenance services.

Parks, playgrounds, pools, tennis and basketball courts, walking trails, private gated common land, and street lights can all be included in the amenities. In addition, street cleaning, landscaping, and security are all possible services.

These amenities and services are only available to homeowners who live in the PUD.

• As with condos, PUDs also have their own rules and restrictions. You don't have to read all the HOA documents if you are looking at a particular PUD. Budget

• Bylaws

• Covenants, Conditions, and Restrictions (sometimes called CC&Rs/declarations)

• Articles of incorporation

• Any other information related to PUD is mentioned in the title report.

The budget can help you to understand the total cost structure of the PUD and how much maintenance is required for the community over the years. This will allow you to decide whether a PUD is right in your situation and within your budget. For example, you might be looking at a detached house in a PUD and discover that the fees are too high for amenities that you don't use.

You might also be able to find a single-family house that isn't a PUD but offers similar amenities such as parks, pools, and playgrounds nearby.

You might be able to skip the HOA dues for the PUD and buy a single-family house.

You may also consider buying a PUD home. The HOA dues provide perks such as yard maintenance and additional security to keep your children safe while they are out with their friends.

The CC&Rs and bylaws are documents that tell owners what they can do and cannot do. For example, these documents might limit pets or restrict the size of businesses you can run from your home. They may also limit the number of cars that you can park on the street. The HOA may be as exact as saying that your car could leak oil onto your driveway.

To determine if a particular PUD is right, you will need to go through all of these documents. Remember that PUDs can be different, so each one will have its unique set of rules.

What Is The Difference Between PUD Mortgages And Single-Family Home Mortgages?

If you want to get a mortgage for a property in a PUD, make sure your mortgage lender knows.

Your realtor will likely have informed you that the property is in a POUD before you make an offer. If they don't tell you, you can usually tell that a property is in the PUD -- even if it appears like a single-family residence -- because it has HOA fees.

For approval and review, your lender will need to obtain the above PUD HOA documents. A PUD will be approved by your lender just as a condo.

They will need to ensure that the budget is in order, with no delinquencies from homeowners; that each year's income goes toward HOA reserves, a separate reserve account; and that the PUD is primarily residential.

While you don't need to verify everything for your lender, it is a good idea to ensure your lender knows the property is in PUDs early in the loan application so that they can approve the loan accordingly.

PUD loans are more complicated than single-family home loans because they require approval of both the legal structure and the financials. However, as long as you let your lender know in advance, this shouldn't take more time.