How is condo lending different ?

Has Condo lending let up? Is it still as hard to get a condo financed?
Yes, and it depends. We have closed more condos this year then we have the past 2 years combined – so yes, we are seeing an upward tick in condo lending.

 

Purchasing a condo is different than purchasing a detached single-family residence and here’s why:  You have TWO sellers. The “HOA” (usually a LLC) that owns the outside of the building and land that it is built on and a “human being” seller that owns dry wall, appliances and everything inside the unit.

You not only have to approve the buyer, but the lender now has to approve the HOA as well.
This is a good thing!
Lenders did not do this before and look what happened. Now the HOA has to pass minimum requirements according to Fannie Mae, Freddie Mac, VA or FHA guidelines.

For FHA and VA loans the condo MUST be approved on the FHA or VA condo websites. 

For conventional loans, there are very few condos that are currently approved by FNMA or Freddie Mac so most are a case-by-case approval process.
The links are listed below for you to review.

 

You can go as little as 3% down on a condo with conventional lending, subject to the HOA getting approved with full condo review. 

 

Prepare your buyer and seller up front. Below are the documents we will need to get the approval process going. If the seller can have these documents included in the seller disclosures that would make things go much smoother and a quicker decision reached.

Be proactive and request a condo questionnaire from your lender to be filled out.

*If you do not have a preferred lender,
Team Wilson would love the opportunity to earn your business.

 

Documents we’ll request from HOA Management Company:  

• ·         Questionnaire
• ·         Bylaws & declarations
• ·         Master Insurance Policy
• ·         Balance sheet w/n 90 days
• ·         Budget  

 Potential Deal Killers:

• * More than 15% of the units are 30 days past due on the HOA fees
• · On Investment Properties if 51% of the units are investment owners this may kill the deal. This does not apply to primary residence. 
• · No single entity, other than units owned by developer still for sale, may own more than 10% of the units.
• * The current budget must show a line item for a 10% reserve account. For example $100k annual income means the reserve line item must have $10k allocated.
• · Allows for daily/nightly rentals and has a check-in desk.
• · The amenities such as a pool, clubhouse are under a recreation lease to another company.
• · Pending lawsuits against the developer/builder that have not been resolved. Although a slip and fall or minor law suit may be okay.
• · If the commercial space within the project is greater than 25%.
• · Property insurance for the total project is less than $80/sq. ft. The master policy needs to have enough coverage. If it doesn’t we will need an appraisal evaluation of the entire condo project. Insurance agent may already have this but has to been done w/n 3 yrs.
• Some Important Facts & Positives to know:

• ·         INVESTOR condos – up to 70% LTV in Florida can now take advantage of LIMITED REVIEW as long as the project in an eligible project.
• ·         25% down on a primary residence condo = streamline condo review.
• ·         Try to obtain some documents from the seller during the inspections period to review. We ask for these documents b/c they are important. Your buyer should review them as well.

Websites:

FHA:  https://entp.hud.gov/idapp/html/condlook.cfm

 

VA: https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch

 

Fannie Mae: https://www.fanniemae.com/content/datagrid/condo_pud/condo_approved_projects_report-fl.pdf

 

 

How long do you have to wait?

Bankruptcy | Foreclosure | Short Sale

How long do you have to wait?

To be able to purchase a home after going into Bankruptcy, Foreclosure, or Short Sale.

 

CONVENTIONAL

SHORT SALE: 4 years with 5% down and AUS approval

BANKRUPTCY/CHAPTER 7: 4 years or 2 years if documented

extenuating circumstances and with reestablished credit

BANKRUPTCY/CHAPTER 13: 2 years from discharge or 4

years from dismissed

FORECLOSURE: 7 years however, if property was

surrendered in a bankruptcy, then 4 years from date of

final discharge with AUS approval.

 

FHA

SHORT SALE: 3 years if delinquent at the time of the short

sale or 1 year with extenuating circumstances or No

Seasoning if current on all debt at time of Short Sale

BANKRUPTCY/CHAPTER 7: 2 years with established credit

BANKRUPTCY/CHAPTER 13 : 12 months history of

current payments and letter from bankruptcy judge

authorizing a home purchase

FORECLOSURE: 3 years from transfer of title date

 

VA

SHORT SALE: No seasoning period, requires AUS approval

BANKRUPTCY: 2 years with established credit

FORECLOSURE: 2 years from transfer of title date

 

RURAL HOUSING

SHORT SALE: 3 years if delinquent at the time of the short

sale or 1 year with extenuating circumstances or No

Seasoning if current on all debt at the time of Short Sale

 

BANKRUPTCY: 3 years with established credit

FORECLOSURE: 3 years from transfer of the title date

 

Beginning January 1, 2013, a new 3.8 percent tax on some investment income

will take effect. Since this new tax will affect some real estate transactions, it is

important for REALTORS. to clearly understand the tax and how it could impact

your clients. It’s a complicated tax, so you won’t be able to predict how it will

affect every buyer or seller.

To get you up to speed about this new tax legislation, the NATIONAL

ASSOCIATION OF REALTORS. Has developed this informational brochure.

On the following pages, you’ll read examples of different scenarios in which this

New tax — passed by Congress in 2010 with the intent of generating an estimated $210 billion to help fund President Barack Obama’s health care and Medicare overhaul plans — could be relevant to your clients.

Understand that this tax WILL NOT be imposed on all real estate transactions,

a common misconception. Rather, when the legislation becomes effective in 2013,

it may impose a 3.8% tax on some (but not all) income from interest, dividends, rent

(less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.