Condo Bank Loan Rates?

[flyguy]

Question for any Florida bankers out there.

What is the interest rate on a conventional 15 or 30 year loan or a 5/1 ARM on a panhandle beachfront condo. Details: Price $350,000, down payment would be 20% up to 50% to secure a good rate. Excellent credit rating and financials. Assume the condo would appraise close to the sales price.

I live in Georgia and my realtor friends tell me condo loans in Florida have become difficult/costly to obtain.

Trying to plan my cash holdings as my time to purchase may be drawing near.

Thanks,
Flyguy

 

[Mango]

I'm licensed in the Northeast, but I can give you some tips and rationale for the reason for difficulty in obtaining condo mortgages.

A condo questionaire is generally sent to the management agency. One of the questions is the percentage of owners who are investors vs. owner occupied units or second homes. Very few FL. condos have a higher % of of O/O units vs. New York City. The agencies will not purchase certain condo types. They also will ask how many units are in arrears in their common charges, so it's important you find out this info when you purchase, especially with the short sales and foreclosures prevalent.

I would first check some local Lenders to see if they are still offering condo loans. Some local Banks do not have correspondent wholesale Broker programs. They know the market and of importance, some Banks portfolio their ARM's. This means they do not sell them on the secondary market. They'll have guidelines, but they can bend them a bit if you're a credit worthy borrower. When you do find a Bank, there will be a pricing addition most likely for condo. Pay the pricing addition in the form of points in lieu of upping your rate. With ARM's your rate can increase dramatically incorporating points without inching them down uniformly, so ask for as close to par pricing and pay the points.
Of course speak to a local Broker/Banker as well and shop, shop, shop.
If there's a condo you are particularly interested in, make sure you have the Broker/Banker check the Banks list to see if it is an approved condo or on the blacklist.
Good luck.

 

[Matt J]

Mango, is there still wiggle room if you are credit worthy with the mortgage debacle?

 

[Mango]

Mango, is there still wiggle room if you are credit worthy with the mortgage debacle?

With a porfolio Lender, what they will be looking at is (if they make exceptions, and it's usually to Loan to value) is first and foremost, post closing liquidity. Some people are saying banks are hungry for ARM's right now, some people are telling me Banks are tightening their belts or eliminated condos altogether. I guess it depends on who you talk to.

If you're talking about debt to income ratios, no wiggle room, unless you are in a field like medicine where incomes rise with experience, and one also has some post closing liquidity. I would only do it if I was underwriting that loan if it were the Borrowers primary residence and they did not own any other real estate.

 

[Little Fish]

Flyguy:

Are you interested in buying into a newly completed project? If so, realtors responsible for selling the building will likely have "approved local lenders" and "approved local appraisers" which will make the application process run smoothly... or at least that was what I was told.

Recently, I had a successful closing on a new purchase of a beachfront condo in PCB. I reside in Atlanta and used a mortgage broker in Atlanta. I didn't have problems with the terms or the appraisal. However, my realtor mentioned that two of her other clients did have problems. One of the clients used Countrywide, and the other, I am unsure who they used. That said, I understand it is much easier to be approved for a loan with a local bank as they tend to understand the market better than out-of-state lenders.

My realtor originally recommended I call Regions (who provided original financing for the developer), Access Bank or ResortQuest mortgage. I handled it my own way.

One other thing you should be aware of... many lenders do not like to lend for units in buildings deemed to be condo-hotels. Originally, my lender thought this would be a problem since we have a concierge and welcome desk/lobby in our building. The problem is that most new construction has amenities that appear to make the buildings look like a condo-hotels. In the end, our building was deemed not to be a condo-hotel, so this didn't affect me. Nevertheless, I recommend you find out first if the building qualifies as a condo-hotel and then proceed from there.

Finally, if you intend to own the unit inside an LLC, be sure you apply under the name of the LLC. In my case, I contracted for the unit in my name and planned to quit claim the property into a newly formed LLC. When I went to closing, I was told that if I wanted to quit claim the property into the LLC, I would be responsible for a second set of doc stamps. If you are unaware, this is very expensive in Florida. I opted against deeding into an LLC.

Hope this helps.

Little Fish

 

[YoungFT]

My personal favorite rate quote tools is at www.amerisave.com

After entering the criteria on the home page, you'll be able to refine the information on the results page to include condo, # of stories and investment vs. second home. It will give you an idea of rates and total costs to close.

While lending standards have tightened, banks are not completely out of the business of lending. Even with a condo, if you plan to fully document your income and assets, put a minimum of 20% down, have the excellent credit you describe and the lender requires you to use one of their approved appraisers, it should be a breeze.

Happy hunting!

 

[Matt J]

Cool, thanks Mango.

 

[rancid]

Flyguy:


Finally, if you intend to own the unit inside an LLC, be sure you apply under the name of the LLC. In my case, I contracted for the unit in my name and planned to quit claim the property into a newly formed LLC. When I went to closing, I was told that if I wanted to quit claim the property into the LLC, I would be responsible for a second set of doc stamps. If you are unaware, this is very expensive in Florida. I opted against deeding into an LLC.

Hope this helps.

Little Fish

Can you quit claim a property into a LLC if the mortgage is in your name ?

 

[elgordoboy]

Can you quit claim a property into a LLC if the mortgage is in your name ?

Who owns it? You or the bank?

 

[SGB]

Finally, if you intend to own the unit inside an LLC, be sure you apply under the name of the LLC. In my case, I contracted for the unit in my name and planned to quit claim the property into a newly formed LLC. When I went to closing, I was told that if I wanted to quit claim the property into the LLC, I would be responsible for a second set of doc stamps. If you are unaware, this is very expensive in Florida. I opted against deeding into an LLC.

Although many title companies in the area believe that you have to have a full set of doc stamps to quit claim into an LLC, it is most definitely NOT TRUE. When we refinanced our house, the lender would not refinance a house in an LLC, but they were fine with us quit claiming it over to the LLC afterwards. (This never made any sense to us, but who are we to argue.) The title company insisted that we would have to pay doc stamps to make this happen, which we did do. After the fact, we were talking to our lawyer (who we should have used for the transaction to begin with) and he insisted that as long as the LLC was essentially, just my husband and myself, no doc stamps were required. Our mortgage broker (out of state) went back to the title company, who continued to insist we did need doc stamps, and then to the county and state. The county and state confirmed what the lawyer said, that we did not need doc stamps. The doc stamp fees were refunded to us.