Posted on: 23rd Jun, 2008 06:44 pm
Why have condo mortgages been made harder to get?
Welcome Mzlogan,
That's because lenders have tightened lending rules thereby requiring one to have good credit and provide more documentation and down payment. Also, condo values have dropped down and people aren't interested to buy anymore; rather they want a lease option on the condo.
That's because lenders have tightened lending rules thereby requiring one to have good credit and provide more documentation and down payment. Also, condo values have dropped down and people aren't interested to buy anymore; rather they want a lease option on the condo.
My Condo did sell. The buyer had perfect credit and 10% down. She was pre approved and then turned down the day of closing.
Leaping before you look can ruin your sucess!
Hi elissa.
Welcome to the forum.
Even after getting pre approved the lender may decline you your loan application if you mess up your credit. So pre-approval is not a grantee that the lender will fund you loan. BTW have asked your lender, why has he turned down on the day of closing even you were pre-approved?
Best of luck,
Larry
Welcome to the forum.
Even after getting pre approved the lender may decline you your loan application if you mess up your credit. So pre-approval is not a grantee that the lender will fund you loan. BTW have asked your lender, why has he turned down on the day of closing even you were pre-approved?
Best of luck,
Larry
Hi Mzlogan,
It's not longer easy to get condo mortgages because Fannie Mae and Freddie Mac have made changes in loan underwriting and also some private mortgage insurers have tightened rules for providing mortgage insurance. Especially in declining markets, private mortgage insurance will possibly not be available. As a result of which lenders have no protection in case borrowers/buyers default on the loans they'll offer.
Moreover, Fannie Mae has imposed the legal documentation, adequacy of condo association operating budgets etc on loan officers. This requires huge paperwork to be done by lenders and perhaps that's the reason they are reluctant to offer mortgages on condos.
By the way, are you looking for mortgage on condo?
It's not longer easy to get condo mortgages because Fannie Mae and Freddie Mac have made changes in loan underwriting and also some private mortgage insurers have tightened rules for providing mortgage insurance. Especially in declining markets, private mortgage insurance will possibly not be available. As a result of which lenders have no protection in case borrowers/buyers default on the loans they'll offer.
Moreover, Fannie Mae has imposed the legal documentation, adequacy of condo association operating budgets etc on loan officers. This requires huge paperwork to be done by lenders and perhaps that's the reason they are reluctant to offer mortgages on condos.
By the way, are you looking for mortgage on condo?
Oh that's me, I just got logged out.
samantha, i can't believe you cited the "huge paperwork" as a possible reason for lenders not approving loans on condominiums. there might be a lazy loan officer or two or a hundred out there, but even if that's the case, there are plenty of the rest of us who are not too lazy to do whatever is necessary to get a loan approved (though that still can't prevent some loans from being declined).
the rest of your analysis is fine - but owner occupancy rates of condos are not as high as is desirable, therefore making each loan a riskier one. also, as noted, values have declined in many areas, and continue to do so. this is also a major risk factor. lastly, with freddie mac and fannie mae limiting approvals of condominium projects in spots, it is harder to approve a loan that will end up being marketable. mortgage insurance companies have also tightened up their standards, furthering the difficulty.
but paperwork? come on...our entire lives are incumbent upon paperwork.
the rest of your analysis is fine - but owner occupancy rates of condos are not as high as is desirable, therefore making each loan a riskier one. also, as noted, values have declined in many areas, and continue to do so. this is also a major risk factor. lastly, with freddie mac and fannie mae limiting approvals of condominium projects in spots, it is harder to approve a loan that will end up being marketable. mortgage insurance companies have also tightened up their standards, furthering the difficulty.
but paperwork? come on...our entire lives are incumbent upon paperwork.
HUD has a list of qualified (approved) Condo projects if the home is part of a development on this list it shouldnt be too hard. To qualify the occupance needs to 80% or above owner occupied and for FHA less than 50% can be funded with FHA loans.
It is a little more paperwork and can be a challenge but it is usually because anyone who has ever dealt with one (and I hate to blanket any group - but I will) knows that HOA's are not usually organized and their management groups are usually less than cooperative at getting any paperwork done.
It can be done and is worth looking into but there is more risk to a bank with a condo and therefore it is a little more difficult.
Brian
It is a little more paperwork and can be a challenge but it is usually because anyone who has ever dealt with one (and I hate to blanket any group - but I will) knows that HOA's are not usually organized and their management groups are usually less than cooperative at getting any paperwork done.
It can be done and is worth looking into but there is more risk to a bank with a condo and therefore it is a little more difficult.
Brian
I hate it when I do that
HUD has a list of qualified (approved) Condo projects if the home is part of a development on this list it shouldnt be too hard. To qualify the occupance needs to 80% or above owner occupied and for FHA less than 50% can be funded with FHA loans.
It is a little more paperwork and can be a challenge but it is usually because anyone who has ever dealt with one (and I hate to blanket any group - but I will) knows that HOA's are not usually organized and their management groups are usually less than cooperative at getting any paperwork done.
It can be done and is worth looking into but there is more risk to a bank with a condo and therefore it is a little more difficult.
Brian
HUD has a list of qualified (approved) Condo projects if the home is part of a development on this list it shouldnt be too hard. To qualify the occupance needs to 80% or above owner occupied and for FHA less than 50% can be funded with FHA loans.
It is a little more paperwork and can be a challenge but it is usually because anyone who has ever dealt with one (and I hate to blanket any group - but I will) knows that HOA's are not usually organized and their management groups are usually less than cooperative at getting any paperwork done.
It can be done and is worth looking into but there is more risk to a bank with a condo and therefore it is a little more difficult.
Brian
