Home Buying in 33186>Question Details

PB_WD40, Home Owner in Miami, FL

Hi all, we are in the final days of a HAFA short sale in Miami for a condo (closing deadline is this Friday). I spoke to my loan broker yesterday ..

Asked by PB_WD40, Miami, FL Wed Aug 15, 2012

and apparently the underwriter doesn't like the condo questionnaire that the association returns (reserves are too low supposedly). The loan broker is is trying to figure out a way around the issue but there is a reasonable chance the loan could get denied. The thing is, we actually do have the cash to buy it outright (75k purchase price, although we prefer to do a loan as that would be the entirety of our savings).

We've already put a lot of money and effort into this deal (HOA approval application fees, estoppel letter fees etc) that it really makes sense to do a cash deal if the loan doesn't go through.

My question is: how difficult is this to do at the last minute? Would the seller's bank balk at the last minute change? Do they care as long as they get the money? And finally, does it take long for the title agent to re-do a Hud-1 for a cash offer (it's going to be difficult to extend the deadline)? Thank you for your time!

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Good Morning,

The questions that you are asking are extremely good questions. When it comes to condos here in Miami, not doubt elsewhere too, due to the amount of owners that defaulted on their condos with their mortgage and condo fees, many condo associations found themselves in situations where they had no reserve funds. FHA has not renewed many of the condo buildings ability to offer financing and in many instances FNMA has limited which condo buildings qualify for financing as well. For the most part many buyers of condos are paying all cash, or placing between a 20-30% as a downpayment. Additionally, I have had a few buyers that have just obtained personal loans to finance their purchase and because the loan is not secured by the property they have not had any issues in getting to closing.

If you do decide to purchase the condo for all cash, having the title company redo the HUD 1 would take all of 5 minutes as it is then just removing closing fees related to the loan. The short sale lender would not have a problem with the change so long as you do have the funds to close. At most they would ask you to provide bank statements to show that you do have the ability to make the cash purchase. Good luck with your closing, Should you have additional questions please feel free to contact me.

Lila Lopez
RE/MAX Advance Realty
0 votes Thank Flag Link Wed Aug 15, 2012
Thanks all for your great help! We decided to go with the cash option.
0 votes Thank Flag Link Thu Aug 16, 2012
Based on what you have stated, you will need to pay cash for your Miami condo. It is very dfficult to get condo loans today. If the association has less than a 10% reserve, no bank will grant a mortgage.

Since you are paying cash, the bank will be eliminated from the transaction, so they will have no say in what goes on.

The only person you have to work with in an all cash deal is the seller; and it is highly unlikely any seller will turn down an all cash deal if you have already agreed upon price. There is total certainty in cash. You and the seller are the only parties involved.

The title company will not care if you move to all cash. Drawing up another HUD-1 will take them no time. They just cut and paste on their computers. Also, if you pay cash, instead of getting a mortgage, you will save some money in closing fees.

Marc Jablon, The Jablon Team
RE/MAX Complete Solutions
0 votes Thank Flag Link Thu Aug 16, 2012
Do you want it if the bank doesn't? Think hard.
0 votes Thank Flag Link Wed Aug 15, 2012
Remember if you put all your money or savings in this condo buying cash, at the end you have savings in the mortgage payment. Think in that way. Every investment in Real Estate has return, you are going to find out in a few years or maybe in the next year due to Real Estate prices are going up and up.

Closing Statement HUD-1 is easy to prepare it. Rush your agent and the Listing Agent to find it as soon as possible to present it to the seller's lender.
0 votes Thank Flag Link Wed Aug 15, 2012
Great questions, you can only do it and await the discretion of the HAFA Short Sale Lender's approval. A) convert to a cash ransaction and close speedily; or B) See the next few items of info here. #1. To the loan, a Condo with low reserves I would ask 2 questions: #1. Get a copy of the Condo's latest financial statements year-to-date AND their current Operating Budget, you are entitled to all this and more by Fla statute; and determine for yourself if this and any other financial inequities exist to cause you not to buy this Condo if its in poor financial condition? #2. I don't know the lender you're using and most have different policies on condos. I have some that will loan 75% LTV to a stong credit score borrower (700+) with "limited condo doc review" and others that want 40% - 50% down or won't touch them at all ...So it all depends on your lender/loan broker? Who are they and what are they saying? If the "loan broker" doesn't know what options there are I'd be looking for another lender real fast. The HUD-1 can be done in minutes, that should not be an issue. If you have the right, well educated & experienced parties working on the Seller's behalf on the Short Sale and your Buyer's Agent & loan officer and title closer all know what they're doing as well, and extension is not out of the ordinary, it just must be presented in the right light & be for a plausible reason and short, realistic time-frame. Any other questions or issues please fell free to call me.
0 votes Thank Flag Link Wed Aug 15, 2012
Should not be a problem.. The HUD settlement statement will be revised in 5 minutes.
0 votes Thank Flag Link Wed Aug 15, 2012
have your lender switch to a 95% LTV Condo Purchase loan without the 1.75% financed MIP fee

see loan programs here: http://www.pro-option.com
0 votes Thank Flag Link Wed Aug 15, 2012
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