Financing a San Mateo Condo with New Rules

11/16/2009

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 Williamson
Mortgage Advisor - Mortgage California
Phone: (650) 520-0915
www. SanMateoMortgageBlog.com

Chris Williamson Chris@ChrisEWilliamson.com Phone: (650) 520-0915

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


Questions During the Webinar

You may type questions in at any
time during the presentation –
Question box on your screen

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11/16/2009

Financing a Bay Area Condo

Chris E. Williamson
Mortgage Advisor
Phone: (650) 520-0915
Email: Chris@ChrisEWilliamson.com
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

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11/16/2009


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

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11/16/2009


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

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11/16/2009


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

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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.


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

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11/16/2009


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

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11/16/2009


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

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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

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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

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11/16/2009


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

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11/16/2009


Resources You Can Use at Home


SanMateoMortgageBlog.com


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

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11/16/2009


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 Online

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11/16/2009


Free Consultation

Chris Williamson
Phone: (650) 520-0915
Email: Chris@ChrisEWilliamson.com
www.SanMateoMortgageBlog.com

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Financing a San Mateo Condo with New Rules

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