Financing in 80205>Question Details

nslingsby, Home Seller in 80205

Owner Occupancy Rates for Mortgage Financing

Asked by nslingsby, 80205 Thu Aug 30, 2012

Own a condo in a 3-unit complex. The other 2 units are currently leased, thus my property is not majority owner-occupied. As a result, I am not qualified to refi with a traditional or Fannie Mae loan (the property is not HUD approved). Along these same lines, a potential purchaser, were I to list the property, would not qualify for funding either. Is there any consideration for the fact that there are only 3 units? Do I have any options for refinancing or listing to someone seeking traditional funding? Advice??

0 votes Share Flag Financing in 80205

Help the community by answering this question:


Compass Bank, Key Bank and some Credit Unions offer portfolio loans ( the loan is held and serviced by the banking institution) that you can refinance with. Typically rates are competitive. I have used both Compass and Key Bank recently to help buyers purchase in condo and townhome complexes that were not FHA certified, as there are many today that either lost their certification or have lopsided rent/owner ratios as in your situation. Hope that helps.
1 vote Thank Flag Link Thu Aug 30, 2012
There are other options besides Key, Compass and Vectra. If you would like to call me as I am a well versed lender in the condo market and know many of the guidelines at the above mentioned lenders. I work for a community bank and we do too have a portfolio product that allows for condos in your situation.

Andy Inhelder
Mortgage Banker
0 votes Thank Flag Link Thu Sep 6, 2012

Good advice below. If you are a member of a credit union I would try that for refinancing. Also as mentioned Key Bank and Compass Bank are portfolio lenders that don't necessarily have to adhere to the same guidelines as FHA, FNMA and FreddieMac. You can ask them about a buyer qualifying to purchase as well using their products. There is some legislation being written to loosen the strict FHA guidelines in place now that have put a choke hold on condo sales. I will check to see how that is progressing and report. I wouldn't expect to see anything change until after the election.

Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
0 votes Thank Flag Link Thu Aug 30, 2012
A few items. Key & Compass may have different rules for refinancing, but for straight-up new purchases, they also have owner-occ threshholds (Key's Key Community Loan actually requires 60%!). Vectra Bank has portfolio loans (see Paul's explanation of that below) that are very creative, worth calling there.
As for selling, if you used an FHA Loan to purchase the property, it is likely assumable. Speak with your listing broker (or potential listing broker) about how to do this. It is a LOT easier than people think. The issue is with how competitive your FHA rate was - there are some buyers who will turn there nose at 5.5% or 6% rate, which is hilarious from a historical viewpoint, but others who will lap it up for the right unit b/c they just cannot find FHA-approved buildings otherwise. Also, that buyer can refi after 12 months of on-time payments. The other issue is if you are trying to cash in on value increase, that makes it difficult.
But actually, I am seeing a lot of cash or big downpayment buyers of late. You could end up being OK. I actually have a cash buyer seeking 1+BR, garage/carport AND private washer/dryer - does your unit fit that bill?
0 votes Thank Flag Link Thu Aug 30, 2012
The best thing you can do get more opinions about your lending options. Some lenders that are locally underwritten will have greater flexibility with occupancy rates. If you find a lender that is not reselling the loan, they may take the risk with less than 20% down.

Click the "partners" box on my website for a couple great lender suggestions.

Best of luck!

- Pete
0 votes Thank Flag Link Thu Aug 30, 2012
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