For the past 2 years, EVERY one of my first time buyers bought their home using a FHA (Federal Housing Authority) loan. The reason is quite simple, you can buy a home with just 3 ½ % down versus 10% with a traditional loan. Buying a single family home is not a problem, but condos are a horse of a different color.
All condos have associations and condo declarations (rules and regulations for the owners). It is standard practice for many declaration to give the condo association the “First Right of Refusal” which provides the association the option to buy the condo right our from under a prospective buyer. While I have never seen this happen, in over 25 years, FHA deems this discriminatory and will not lend on a condo if this clause is present in the decs. It wasn’t a problem a few years ago when banks would gladly lend you 100% to buy anything you wanted if you could fog a mirror.
Effective 11/2/09 FHA is eliminating the rule on “First Right of Refusal”. BUT DON”T GET EXCITED! In its place FHA is passing on to each individual lender, the burden of getting a condo project FHA approved. Lenders will need to spend money to analyze, package and submit condo developments to the FHA for approval. Once the lender obtains approval, they will be able to write FHA loans in that development. Other lenders who want to make FHA backed loans in that development will need to go through the same process to get the condo development approved for their company. The process will be done lender by lender; development by development. It is going to take some time.
This whole process will eventually get sorted out. But in the meantime, get ready for a long cold winter in the condo financing market.
I’m working hard with Julie to find her a great condo before November 2nd; I don’t want to hold back this rising star.
Wayne O'Day
For even more helpful information, visit www.TheODayTeam.com
Follow me on Twitter: http://twitter.com/WayneODay
Visit me on Facebook: Wayne ODay
No comments:
Post a Comment