Download - 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


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


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


11/16/2009

3

Condo Financing – New Challenges

A New and Different Lending Environment

Financing Condominiums is…

• More Difficult

• More Problematic

• More Time Consuming


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!


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


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


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


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


11/16/2009

5

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


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


Why You Need a Genuine Pre-Approval

A Loan Pre-Approval

• Demonstrates your credit worthiness• Determines your purchasing power• Determines your financing options


11/16/2009

6

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.


Two Types of Loans Today

• FHA

▫ Government Insured

• Conventional

▫ Not Government Insured


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


11/16/2009

7

Conventional Financing

• Ideally Put 20% Down

▫ Best interest rates

▫ No Mortgage Insurance

• Condo Requirements Set by Fannie Mae

▫ Not by the lender


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


Complex Approval

Condominium Complex Approval is Determined by the Financing You Choose


11/16/2009

8

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


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


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


11/16/2009

9

Documentation Needed

• Condo Questionnaire/HOA Certification

• All Condo Legal Documents

• All CC&R’s

• Financial Statements and Budget


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



• 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


11/16/2009

10


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


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


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


11/16/2009

11

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


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!


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


11/16/2009

12

Resources You Can Use at Home


SanMateoMortgageBlog.com


Financing Questions?http://sanmateomortgageblog.com/ask-a-question


11/16/2009

13

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


Enjoy this Webinar?

• Please help us spread the word by telling your friends and family.


Apply OnlineChris Williamson [email protected] Phone: (650) 520-0915

11/16/2009

14

Free Consultation

Chris Williamson

Phone: (650) 520-0915

Email: [email protected]

www.SanMateoMortgageBlog.com
