Mortgage Reminders: My Inconsistent Fed Comments; Rent Backs; Owner Occ Ratios; Attached PUDs/Townhomes; 12 Condo Considerations
Here are a few random reminders.
- Powerless Fed Vs. Inflation-Causing Fed. In response to my recent blog about the Fed being “Powerless,” I got this comical point from an agent I really enjoy hearing from:
“I know they say that great minds can hold contrary thoughts with ease, but how do you square a powerless Fed with the massive expansion of the money supply?”
He then quoted this blog I wrote about how it was the increase in the money supply that is pushing up housing prices. In response I said we should never underestimate the Fed’s power to screw things up, e.g. cause inflation, but we should recognize that the Fed may have much less power to control interest rates than we think. Hence, we probably don’t need to fear Fed-inspired rate increases as much as we previously thought.
- Rent Backs for 59 Days. This is a reminder I repeat a few times per year, but sellers can “rent back” a home they just sold to someone who obtained “owner occupied” financing for as long as 59 days. This is a nice perk to offer sellers in hot markets when they might not have found their new home yet.
- Owner Occupancy Ratios For Condo Financing Are Irrelevant… if the buyer intends to occupy the unit. For investor financing, however, the owner occupancy ratios need to be 50% or greater.
- PUDs/Townhomes: Everything Irrelevant. Many attached Planned Unit Developments (PUDs) or Townhomes look exactly like condos (we have to check zoning to tell the difference) and agents ask us all the time if we need to worry about owner occ ratios, HOA litigation, rent restrictions or other issues when they are making offers on such units. And, our answer is almost always “no” b/c lenders don’t review HOA docs at all when financing a PUD/Townhome. The only document required is a copy of the HOA’s master insurance policy.
- PUD vs. Townhome vs. Condo. Here is a blog I wrote that discusses the differences.
- 12 Condo Considerations. Here is a blog I wrote about 12 factors every buyer should consider before buying a condo – especially if she plans on waiving contingencies!
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