Condos - What Every Buyer Needs To Know...
Condos. Buyers who like them, love them. But they cannot always close on them - mainly for two reasons: the number of investors owning the units, or that the condo is in litigation.
There are solutions, with potentially more on the way.
Conventional loans: Did you know that Fannie Mae does not have a limit any longer on the number of investors who own units in a condo project? Nice.
And, with 10% down or more, many lenders will take a look at, and often lend on condos in litigation. Here's what to look for: If the HOA is being sued by some outside party, then many lenders will not lend on the property. (Reason being, that could potentially bankrupt the HOA, and both buyer and lender are up a creek).
But, if the more common scenario happens and the HOA is suing the builder/developer/etc for faulty work, then banks will consider lending on that property. More often than not buyers can obtain a loan, however, the lender will need as much info on the lawsuit as possible to make a decision.
FHA Loans: The majority of condo projects around town are not FHA approved. So, banks cannot lend with an FHA loan. However, HUD has put out for discussion two changes regarding condos.
First, banks are considering bringing back 'Spot Approvals', where a lender can get quick approval on that specific condo unit, and lend using an FHA loan.
Second, FHA is considering dropping their owner occupied unit requirements from the current 50% down to 35%.
Neither of those changes are currently in effect for FHA loans on condos, but one can expect both to be implemented soon. We will let you know when we learn more, since this will be very good for helping buyers get into the condos they really want!
Are you looking to buy a home or condo? The Alan Donald Real Estate Team has a ton of experience selling properties with both owner occupants and investors. Give us a call so that we can help you TODAY! 843-900-0155
This blog post was prompted by an email from our colleague, Jim Duffy with Atlantic Bay Mortgage. Have you been qualified to buy a home? If not, it is important to know what you can afford and where you stand. Give Jim a call to learn more about your lending options, 843-735-0865.