Posted on: 05th Mar, 2009 12:59 pm
Last October 2008, I won an affordable housing lottery to purchase a unit at Audubon Park, Boston MA. It's a new construction condo. I've applied for a SoftSecond loan through Bank of America, but here's my problem now:
As of 2/23/09, only 16 out of the total 53 units at Audubon Park are sold or under agreement- that works out to 30%. Bank of America's pre-sale guideline is 50%, so my loan officer is unable to submit an exception to the underwriters, and thus cannot fund the loan.
I am now stuck with the choice of waiting for new buyers to raise the pre-sale to 50% (but who knows how long it will take in this economy), or to go with another bank. I talked with Mt Washington Bank, but the problem is that they want to add 0.25% on top of the SoftSecond mortgage rate. BTW, BoA's softsecond rate is 4%, while Mt Washington's is 4.5%. (as of 3/4/09)
I would assume that most new constructions in the city would face the same problem, unless there are sufficient cash buyers in the market. I don't want to wait another six (or more) months for Audubon Park to sell another 9 units, nor do I want to go to a bank that charges me an extra .25% on a SoftSecond loan, which defeats the purpose of SoftSecond.
What should I do in my situation?
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As of 2/23/09, only 16 out of the total 53 units at Audubon Park are sold or under agreement- that works out to 30%. Bank of America's pre-sale guideline is 50%, so my loan officer is unable to submit an exception to the underwriters, and thus cannot fund the loan.
I am now stuck with the choice of waiting for new buyers to raise the pre-sale to 50% (but who knows how long it will take in this economy), or to go with another bank. I talked with Mt Washington Bank, but the problem is that they want to add 0.25% on top of the SoftSecond mortgage rate. BTW, BoA's softsecond rate is 4%, while Mt Washington's is 4.5%. (as of 3/4/09)
I would assume that most new constructions in the city would face the same problem, unless there are sufficient cash buyers in the market. I don't want to wait another six (or more) months for Audubon Park to sell another 9 units, nor do I want to go to a bank that charges me an extra .25% on a SoftSecond loan, which defeats the purpose of SoftSecond.
What should I do in my situation?
[size=9:8f31711295][color=Red:8f31711295][Link deleted as per forum rules. Thanks.][/color:8f31711295][/size:8f31711295]
Hi djlionel!
Welcome to forums!
As far as I can understand your situation, rules will not change just for you. Thus, Bank of America's will not fund the loan unless you meet the pre-sale guideline. In that case, if you could afford .25% on a SoftSecond loan, then you can go for it. But if you feel that you will not be able to afford that, then it's better if you could wait for few months and meet the pre-sale requirement of Bank of America.
Sussane
Welcome to forums!
As far as I can understand your situation, rules will not change just for you. Thus, Bank of America's will not fund the loan unless you meet the pre-sale guideline. In that case, if you could afford .25% on a SoftSecond loan, then you can go for it. But if you feel that you will not be able to afford that, then it's better if you could wait for few months and meet the pre-sale requirement of Bank of America.
Sussane
I would be more concerned with the fact that the other units have not sold. If they remain unsold for a few more months then the prices may drop. You dont want to find that you paid more than the rest of the owners. This may be a good time to get out of the contract and then come back in six months when the prices have dropped and they have the 50% occupancy.
paying 4.5% isn't a bad deal no matter the product.
as for timing, i don't disagree with eric's stance that you may save yourself some money by waiting. what isn't clear, though, is whether you're bound by the desire to purchase and own right away. if that is the situation, and you'd like to finalize the deal, i would suggest you grab that extra .25% - what's it going to cost you monthly - $3 maybe?
and if it's like most soft second mortgages, which it apparently isn't, there is typically a forgiveness involved. you didn't make that plain, so i'm taking it for granted that there isn't forgiveness here.
of course, if it's forgiveable, then so much the better for you, even though you've got to make payments.
as for timing, i don't disagree with eric's stance that you may save yourself some money by waiting. what isn't clear, though, is whether you're bound by the desire to purchase and own right away. if that is the situation, and you'd like to finalize the deal, i would suggest you grab that extra .25% - what's it going to cost you monthly - $3 maybe?
and if it's like most soft second mortgages, which it apparently isn't, there is typically a forgiveness involved. you didn't make that plain, so i'm taking it for granted that there isn't forgiveness here.
of course, if it's forgiveable, then so much the better for you, even though you've got to make payments.
