But Condo's must be FHA certified these days.
As yo mentioned the high level of delinquencies for HOA and the number of investors, non owner occupants, makes Condos, non-warrantable.
it may be unfortunate that you can not refi your condo.
Have you thought about selling?
Best of Luck
When a condo complex is denied for whatever reason, as a loan officer there is very little that I can do other than to switch to a non warrantable program with 25% down.The only thing I can suggest is to find out who is completing the condo questionaire (either the homeowner association or the management company and let them know what is happening. That way they can maybe take care of the delinquency issue and get an MI approval. For FHA less than 15% delinquencies are required. I have attached the guidelines below. I know you are going with a conventional loan but the rules are similar.Also ask them how they are interpreting delinquency. I had one association manager counting one day late when they had just switched management companies and half the checks went to the wrong place. Another option is to get lender paid mortgage insurance.
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If your only option is FHA (sounds like it is) you should consider the FHA 5 year ARM. The great thing about the FHA ARM, compared to a conventional 5 year or 7 year ARM, is that it is far less risky for several reasons. First the initial adjustment cap is only 1% above your initial rate, compared to 5 or 6% for most conventional loans. Second, the yearly adjustments after that are only 1%, compared to 2% on conventional. Third, the margin that is used to compute the adjustments in the future is 2%, compared to 2.5 to 3.0% on conventional. Under most scenarios, the FHA 5 year ARM will end up with a lower average rate over time than a comparable 5 or 7 year conventional ARM. Its worth checking out.
Ed Fallon, MBA NMLS#144708
Arlington Capital Mortgage
David, according to the FHA website it says "Status Approved" for these condos. I'm trying to work with the lender but I fear the person I'm working with is junior, so I'll have to move up the ranks to get more info.
Bill, thanks for the response. I contacted the builder earlier today to get more details on the HOA dues that are delinquent, no word back yet. I'll try to get a handle on the other items you mentioned.
I'm just frustrated. I planned on refinancing to a lower rate, but intended to keep paying what I pay today...and I pay ahead. In only 16 months I would have 20% equity and no need for MI anyway. I'm worried we won't be able to sell in the near term (3-5 yrs), so refinancing made a lot of sense so we can chip away at the loan. Ugh.
You should check if the Condo you are purchasing is FHA Approved.. Last year all Condo Associations were required to re-certify their eligibility for FHA financing. You should speak with your lender or another mortgage professional regarding this denial.
If you are a current homeowner, this should be brought to the Condo Board immediately. If you are considering a purchase in the building, you might consider purchasing in a Complex that is more secure in their finances and lower delinquency rates. Ultimately, the Condo owners of the building are going to pay for the delinquencies of the owners who stopped paying.
Best of luck,
David Jaffe-SRES, CDPE
I agree with Mack. I think you should find another condo because you risk further price reductions if it is too difficult for the average borrower to secure financing in this project.
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