Financing a San Mateo Condo with New Rules
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Transcript of Financing a San Mateo Condo with New Rules
11/16/2009
1
Financing a Bay Area Condo
Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit
http://budurl.com/WebinarSlides
Tonight’s Speaker
Chris WilliamsonMortgage Advisor - Mortgage California
Phone: (650) 520-0915
www. SanMateoMortgageBlog.com
Questions During the Webinar
• Financing experts are available to answer questions throughout the presentation
• This is an interactive learning environment. You will get the most value from this program by having your specific questions answered.
• The only dumb question is the one you don’t ask
Chris Williamson [email protected] Phone: (650) 520-0915
Questions During the Webinar
You may type questions in at any time during the presentation –Question box on your screen
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
2
Financing a Bay Area Condo
Chris E. Williamson
Mortgage Advisor
Phone: (650) 520-0915
Email: [email protected]
Blog: www.SanMateoMortgageBlog.com
Purpose & Goals of the Webinar
Purpose
• Empower and Educate Home Buyers
Goals
• Share with you the things we’ve learned about financing a condominium
• Leave you more aware and informed about financing a condominium
Chris Williamson [email protected] Phone: (650) 520-0915
Overview
• New Challenges of Condo Financing
• Keys to a Successful Closing
• Pre-Approval vs. Pre-Qualification
• Two Types of Condo Financing
• New Rules of Financing a Condo
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
3
Condo Financing – New Challenges
A New and Different Lending Environment
Financing Condominiums is…
• More Difficult
• More Problematic
• More Time Consuming
Chris Williamson [email protected] Phone: (650) 520-0915
Condo Financing – New Rules
FNMA & FHA – Stricter Underwriting Rules
• Is Complex Approved?
• Is HOA “Cert” letter prepared?
• Are current HOA Doc’s Available?
Get Your Lender Involved Early!
Chris Williamson [email protected] Phone: (650) 520-0915
Financing a Condominium
Four Financial Keys for a Successful Closing
Get Your Mortgage Professional Involved Early
• Direct Lender
• Mortgage Broker
• Mortgage Banker
Get Pre-Approved
Know Your Financing Options
Plan for New Condo Approval Regulations
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
4
Get Your Mortgage Advisor Involved Early
Financing Solutions to Match your Buying Needs
▫ Determine What you Can Afford
▫ Down Payment and Closing Costs
▫ Programs that Meet your Short & Long Term Goals
Chris Williamson [email protected] Phone: (650) 520-0915
Get Your Mortgage Advisor Involved Early
Work with Your Condo Specialist to
▫ Find the Right Complex
▫ Structure Contract to Reflect Loan Program and its Approval Requirements
▫ Use Contract Contingencies to Protect Yourself
Chris Williamson [email protected] Phone: (650) 520-0915
Pre-Approval vs. Pre-Qualification
Get Pre-Approved, Not Pre-Qualified
• Pre-Qualification
▫ An informal estimate of what you can afford
• Pre-Approval
▫ A loan commitment from a reputable lender
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Mortgage Pre-Approval
A Pre-Approval Requires Verification of…• Income
• Asset
• Credit Score
• Continuing Liabilities
A Pre-Approval Gives You...• Purchasing Power▫ A Pre-Approved Buyer is a CASH Buyer
• The Upper Limit of What You Can Afford
Chris Williamson [email protected] Phone: (650) 520-0915
What is a Genuine Pre-Approval?
A Formal, Firm Commitment to Loan…• Employment, Income, Assets, Debt and Credit History and Score Substantiated• Availability of Down Payment and Closing Costs Verified
Chris Williamson [email protected] Phone: (650) 520-0915
Why You Need a Genuine Pre-Approval
A Loan Pre-Approval
• Demonstrates your credit worthiness• Determines your purchasing power• Determines your financing options
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Why You Need a Genuine Pre-Approval
You won’t waste your time looking at homes you cannot afford.
Use the the financing contingency period to approve the complex.
Chris Williamson [email protected] Phone: (650) 520-0915
Two Types of Loans Today
• FHA
▫ Government Insured
• Conventional
▫ Not Government Insured
Chris Williamson [email protected] Phone: (650) 520-0915
Conventional Financing
• “In-the-box”
• Down Payment
▫ 5% down with loan amounts below $417,000
▫ 10% down with loan amount $417,001-$729,750
▫ Higher mortgage insurance than FHA
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Conventional Financing
• Ideally Put 20% Down
▫ Best interest rates
▫ No Mortgage Insurance
• Condo Requirements Set by Fannie Mae
▫ Not by the lender
Chris Williamson [email protected] Phone: (650) 520-0915
FHA Financing• Storybook Loan
▫ Less stringent on credit scores and credit history
▫ More flexible on work history
▫ No reserves required
• Down Payment as Little as 3.5%
• Mortgage Insurance Cheaper than Conventional
• Condo Requirements Set by HUD
Chris Williamson [email protected] Phone: (650) 520-0915
Complex Approval
Condominium Complex Approval is Determined by the Financing You Choose
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Quickest & Easiest Way to Get Approval
Choose a Complex on the
• Fannie Mae Approved Condo List
▫ Conventional Financing
• FHA/HUD Approved Condo List
▫ FHA Financing
Chris Williamson [email protected] Phone: (650) 520-0915
Not on the Approved List?
• Complex Requires a “Spot Approval”
▫ Takes More Time
▫ Adds Additional Steps
• Important to Get Your Lender Involved Early in this Process
Chris Williamson [email protected] Phone: (650) 520-0915
New Rules for Approvals
• Effective December 7, 2009
• Conventional Financing Easier than FHA
▫ Automated System Determines Eligibility
• FHA More Laborious Process
▫ Review and Approval by Underwriter Determines Eligibility
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
9
Documentation Needed
• Condo Questionnaire/HOA Certification
• All Condo Legal Documents
• All CC&R’s
• Financial Statements and Budget
Chris Williamson [email protected] Phone: (650) 520-0915
Requirements for Approval
• Complex Must Have 2 Units or More
• Max 25% of Total Floor Commercial
• Max10% of Units Owned by One Investor
• Max15% of Units Delinquent in Fees
• FHA: Minimum 50% Sold
• Conventional: Minimum 70% Sold
• Walls-in Insurance Required
Chris Williamson [email protected] Phone: (650) 520-0915
Requirements for Approval
• 50% Owner Occupied for Existing Condos
• 70% Owner Occupied for New Construction
• No Litigation
• Reserve Study
▫ No more than 12 months old
▫ Must show project is 60% funded
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
10
Requirements for Approval
FHA Only Requirements
▫ Complexes with 3 or less units, no more than 1 unit can be encumbered by FHA financing
▫ Complexes with 4 or more units, no more than 30% of the total units encumbered by FHA financing
Chris Williamson [email protected] Phone: (650) 520-0915
Lengthy Approvals Won’t Last Forever• New Regulations Give Lenders Power to Approve Complexes
• First 5 by Each Lender Must go to HUD or FHA for Approval
▫ Can take up to 8 weeks
• After First 5, Should Move Much Quicker
Chris Williamson [email protected] Phone: (650) 520-0915
My Job As a Mortgage Professional
• Package the Transaction to Demonstrate
▫ Credit worthiness of the buyer
▫ Value of the unit
▫ Financial health of the association
• Financing Solutions to Match Buying Needs
▫ Down Payment and Closing Costs
▫ Programs that Meet your Short & Long Term Goals
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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My Job As a Mortgage Professional
• Structure an Affordable Monthly Mortgage Payment
• Find Most Competitive Interest Rates
• Compare Programs and Lenders
• Minimize Out of Pocket Costs
Chris Williamson [email protected] Phone: (650) 520-0915
Knowledge is the Key
• Don’t Use the Media as Your Only Resource
• Don’t Fall into the Trap of Online Lenders
• Know All Your Options
• Choose a Mortgage Professional you trust, have confidence in, and feel comfortable with
The opportunity is out there, you just have to take advantage of it!
Chris Williamson [email protected] Phone: (650) 520-0915
The Opportunity is Out There
• You Have the Perfect Storm▫ Interest rates are at historic lows▫ Realistic home prices
Find a Loan First, Then Find a Home
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Resources You Can Use at Home
Chris Williamson [email protected] Phone: (650) 520-0915
SanMateoMortgageBlog.com
Chris Williamson [email protected] Phone: (650) 520-0915
Financing Questions?http://sanmateomortgageblog.com/ask-a-question
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Webinar: Tax Credit Explained
Guide to the Expanded and Extended Federal Home Buyer Tax Credit
Monday, November 23rd at 7pm
Sign up at
http://budurl.com/TaxCreditWebinar
Chris Williamson [email protected] Phone: (650) 520-0915
Enjoy this Webinar?
• Please help us spread the word by telling your friends and family.
Chris Williamson [email protected] Phone: (650) 520-0915
Apply OnlineChris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
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Free Consultation
Chris Williamson
Phone: (650) 520-0915
Email: [email protected]
www.SanMateoMortgageBlog.com
Chris Williamson [email protected] Phone: (650) 520-0915