Posts

Don’t Waive Contingencies For Condo Purchases – 12 Condo Considerations

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We sometimes have very strong buyers waive contingencies when they make offers on condos. But, no matter how strong a buyer might be from a credit, asset, and income perspective, deals can still readily die if the condo or the Homeowners’ Associations don’t pass muster. For example, litigation, too much commercial use, ownership concentrations, and […]Read More

FHA Loans Available For Condo Buyers

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On October 15th, 2019, the FHA issued new guidelines for condo buyers. First-time homebuyers looking to purchase a condominium will appreciate this new availability because of FHA loans’ low down payment requirement. The new regulations promote affordable and sustainable homeownership and are designed to be responsive to the current market. Many homebuyers who are not […]Read More

FHA Spot Approvals for Condos; We Are Getting Them Already

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I mentioned a few times now how HUD is now granting “Spot Approvals” for FHA financing for single condo units within condo complexes that are not FHA approved. We have already made several requests for spot approvals and have received answers in about a week each time. To obtain a Spot Approval we need the […]Read More

Condo Spot Approvals (again), Reserves, Time-Frames; Rate Volatility

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RATE VOLATILITY On Monday, a top producing loan officer/friend told me over dinner how much he loves the lack of volatility in the current rate environment. He explained that it allows him to float (not lock in rates) for many of his borrowers until he has the time and capacity to process their loans. But […]Read More

Owner Occupancy Ratios; Appraisal Management Companies – Problems & Solution

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Reminder: Owner-occupancy ratios for condos are irrelevant if a buyer plans to occupy the unit; owner-occupancy ratios can be well under 50%. One of the primary reasons we left the broker channel in 2014 was appraisal issues. The wholesale banks forced us to use large appraisal management companies (AMCs), and it was a nightmare. Prior […]Read More

Click-Throughs; Why Borrowers Qualify For Larger FHA Loans? 56.99%

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In our recent monthly newsletter, we measured “click-throughs” for our various articles. Interestingly, the mortgage-related article about debt ratios got the most views. Two things: (1) Be sure to measure your click-throughs when you email newsletters; and (2) Here’s something mortgage related: The same borrower can often qualify for a much higher loan amount if […]Read More

Beware of Homeowner’s Association (HOA) Dues; Lower Qualifications

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As the prices of single family residences (SFRs) continue to climb, we have more and more borrowers shifting their home searches to condos and townhouses. The problem is that they (and their Realtors) often do not account for the impact of HOA dues on their maximum qualification amounts. HOA dues range from $200 to well […]Read More

How To Skirt Condo Issues With “Limited Review”

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Yesterday’s blog outlined potential concerns when financing a Condo. There is a tactic to skirt the concentration issue, when one party or entity owns more than 10% of the units. A strong borrower who puts at least 20% down can garner a “Limited Review” Approval with a select number of our lenders. This type of […]Read More

Condo Concerns? What To Look For

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Things to consider when looking at Condos: 1. Rates are usually higher for condos if the down payment is less than 25%. 2. Concentration Rule. Does one owner own more than 10% of the units? If so, most lenders won’t finance the units. 3. Litigation. If the HOA is involved in litigation, most lenders will […]Read More

Property Type and Fico Score Can Significantly Affect Rate

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We recently had a borrower request a verbal rate estimate after telling us her credit was perfect and that she was buying a townhouse/PUD. We estimated her “no points” rate at 3.875%, assuming her credit score was above 740. Her credit score was actually 718, and she was buying a condominium. The combination of these […]Read More

Property Type Affects Pricing; Condos Look Like PUD/Townhouse

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Property types affect pricing and financing – Condo/PUD Distinction: Condos and PUDs (Planned Unit Developments) can look identical but have different zoning and different pricing and financing options. Attached side-by-side two-story units that all touch the ground can be zoned “CONDO” or “PUD.” Complexes with units that float (that do not touch the ground) will […]Read More

Owner Occupancy Ratios for Condo Complexes

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We are still getting questions about required Owner Occupancy ratios in Condo Complexes. At many of our lenders, if the financing is “Owner Occupied”, the owner-occupancy ratio is irrelevant. Again, Owner Occupied Buyers do not need to worry about Occupancy Ratios in most cases. It is only when the financing is FHA or NON-Owner Occupied […]Read More

Question HOA Owner Occ %’s; HOA Not Always Right

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We have an investor buying a condo. Condo complexes need to be over 50% owner occupied for “investor” financing. Owner occupancy ratios are irrelevant for owner-occupied financing. The HOA initially told us that the Owner Occupancy ratio was 44% (too low for investor financing). The HOA simply based their estimate on the % non-site addresses […]Read More

Condos: Owner Occ Ratios; Litigation OK?

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We are repeating a few Condo guidelines again b/c we get asked so often. Owner Occupancy Ratios for Condos are irrelevant if a borrower is an owner-occupant. The condo complex can have 20% owner occupancy rate, for example. This is the same case for borrowers seeking FHA financing; if the complex is FHA approved, the […]Read More

Condo vs. PUD/Townhouse

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We were asked today about the differences in financing in regard to Condos vs PUDs/Townhouses. “PUD” stands for Planned Unit Development. Condo owners do not own the land underneath their units. Many condos, in fact, do not sit on land but “float” on 2nd or higher floors. PUD/Townhouses always sit on land, as “ground floor” […]Read More

Condo Owner Occupancy Ratios Re-Visited; 2 to 4 Units – All But One

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We had many questions on Monday about Owner Occupancy Ratios and condos, so we want to reiterate this: If a buyer intends to occupy a condo, his financing will not be affected by the owner occupancy ratio. This is the case no matter how low the occupancy ratio might be. The occupancy ratio will not […]Read More

Condo Owner Occupancy Ratios Irrelevant for Owner-Occupants

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This is a reminder that Condominium Owner-Occupancy Ratios are irrelevant if the person seeking financing intends to occupy the unit she is buying. It is only investors looking for financing who need to worry about occupancy ratios. Most investor financing requires occupancy ratios greater than 50%. Jay Voorhees Founder/Broker | JVM Lending (855) 855-4491 | DRE# […]Read More