Home Buying in 60614>Question Details

Cc1462, Home Buyer in 60614

My credit score is 750. I was told today need to put 25% down for a purchase of 10 yr old condo in 3 flat in Chicago. Is this accurate?

Asked by Cc1462, 60614 Wed Dec 23, 2009

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I would listen to the advice given by lenders in the Chicagoland area. States have different loan amounts that would qualify you for an FHA , Conventional or a JUMBO loan. Some of the advice given below is not correct because in our area an FHA loan allows up to a $410,000 loan amount and a conventional loan allows up to a $417,000 loan amount...... otherwise the loan would be considered a JUMBO loan.

Here is a link for FHA loan limits in Illinois:

http://www.fha.com/lending_limits_state.cfm?state=ILLINOIS

Good luck!

I hope this information helps!
1 vote Thank Flag Link Thu Dec 24, 2009
That helps, thank you. If you're talking a loan of $435k at 10% down, I'm working off a price of +/-$483k.

If I'm using the wrong price range, correct me. The advice at $425,000 purchase versus $483,000 should be entirely different because they are two totally different scenarios. Assuming a $483k price:

FHA probably won't be the most attractive. The real value of FHA is the lower mortgage insurance cost at the lower down payments, but that is defeated with a $73k down payment. The 5% programs either (a) require a $417,000 loan amount and it's not 5% down in your scenario or (b) they are a portfolio product and I have yet to see a set of numbers that were more attractive than conventional loans.

For you, 25% seems high without knowing anything else about the condo association.

Typically, the next step should be to review options for you at roughly an 85% loan (keeping your loan below $417,000 for conforming/best rates), an 80% loan, and I could understand at least comparing a 75% loan as it may be cheaper for you on the condo.

If you'd like to speak tomorrow, I'm in until noon or I'm around today.

Happy Holidays,
Chris
773.931.2424
1 vote Thank Flag Link Wed Dec 23, 2009
It sounds like they are talking about a conventional mortgage. It could be that the building is not FHA approved. I recommend my buyers talk to at least 2 lenders before choosing a mortgage company. If you know your credit scores they don't have to run your credit to talk to you about your options. Make sure you find a lender you can trust.
1 vote Thank Flag Link Wed Dec 23, 2009
Dear HomeBuyer:

I am a Realtor and not a Lender. However, I know quite a bit about lenders and lending!! Too often people are using internet to get an answer when they should use it for basic research. You are at the stage where you want to purchase a specific property and one lender told you what was needed.

However, that is one lender. I also noticed that you haven't indicated your entire situation which includes whether you have steady employment and how long you have worked with the same employer, inclusive of your income and debt to loan ratios. Some lenders want more "skin in the game" from those who work for themselves/ have their own businesses. I would advise you to use the internet to find various lenders and then set up appointments to meet with several lenders. Bring your paperwork regarding your credit scores, W-2's, tax papers etc. and then obtain their mortgage requirements and possibly negotiate some terms.

Meet personally with various lenders and get the loan that you need to purchase the property!!

If you are serious, contact me and I will give you the name and phone number of a reliable lender who can tell you how he can service you. His company upon closing, will issue your favorite charity a donation also!!

Look forward to hearing from you!!

Contact me at 312.523.8174
Harold Arnold
Amer. Invsco Realty
http://ChicagoCityHomeSales.com
0 votes Thank Flag Link Mon Dec 28, 2009
Getting a condo FHA approved is not that difficult if you have someone that knows what they are doing. My company, Condo Approval Professionals LLC, specializes in this area. We have over 16 years of national project approval experience and can help those that desire to get their condo FHA approved. That includes realtors that will need some of the condo listing FHA approved as the "spot" program will end and the end of January.

Contact me for assistance at (847)293-2962 or by e-mail at steve@condo-approval.com
0 votes Thank Flag Link Thu Dec 24, 2009
No professional can render an opinion unless your entire file is reviewed.

Up to lender an their requirements , many factors are considered when determining mortgage amount, down payment. With the 25 % does eliminate PMI? I am assuming.

Questions need be directed to mortgage broker

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911

http://www.lynn911.com
0 votes Thank Flag Link Wed Dec 23, 2009
Hi CC,

Good answers so far (some). I had some clients run into a similar situation earlier this year. They were in the JUMBO loan category which is borrowing anything over $417,000 in Chicago. The big banks (think Wells Fargo, Bank of America & Chase) wanted at least 20% down if not 25% down on a JUMBO. One other hurdle we had was we were buying in a new construction complex in Lakeview and we were the second of six units. Big banks didn't like those sold ratios so were making things difficult.

To get things done we had to speak to a mortgage broker instead of a lender from the big banks. He was able to find a credit union in Wisconsin who had two requirements: 1. Illinois or Wisconsin resident. 2. 720 or higher credit score. We met both and moved forward with them. They were wonderful to work with and were flexible with down payment amounts (and sold ratios for new construction, but doesn't sound like that's an issue for you). So, just know that it can be done but some of the more familiar avenues like a big bank might be a dead end. You just have to keep shopping and don't stress.

Let me know if there is anything I can do to help. Still work with the same lender for situations like this as well as some good lenders from Wells and Bank of America. Best of luck to you!!

Mike Long
Long Realty

PS-FHA is a wonderful option but can be very tricky downtown Chicago. Majority of condo buildings down there are not FHA approved. If they are not FHA approved it is terribly difficult to get things done. Not saying can't be done but that is another conversation. For sure you should look into it but I'm thinking you have a good shot of a conventional loan with your 10% down if you can find the right lender.
0 votes Thank Flag Link Wed Dec 23, 2009
CC, you have a lot of help in your area. Good for you.

I would just like to inform you of a couple of points that will hopefully be helpful.

As stated below, you can definitely get a mortgage on a condo with less than 25% down-both conventionally and through an FHA loan.

If you get an FHA loan, you will have to pay a one time fee that is called "upfront MIP". It is a one time fee of 1.75% of the loan amount ($1,750 for every 100k borrowed). You can finance the UFMIP into the loan-you don't have to pay for it out of pocket (if you are borrowing 100k then your loan amount would be $101,750).

If you get a conventional loan and are putting down less than 25% for a condo you will get hit by Fannie Mae with a one time fee of .75% ($750 for every 100k).

If you are putting down less than 20% you will have to pay monthly mortgage insurance. On a conventional loan for a condo you will pay anywhere from .7%-.9% of the loan amount per year, divided into equal monthly payments (if you're borrowing 100k then you would pay 100k times .008 which is 800 divided by 12).

For an FHA loan you would pay only .5% if you are putting down 3.5% and if you are putting down 5% or more then you would only pay .5% in mortgage insurance per year.

Make sure the lender you choose does FHA loans as well as conventional because they will be able to run both scenarios for you so you can choose the better one.

I hope this was helpful.

Good luck.
0 votes Thank Flag Link Wed Dec 23, 2009
No matter what kind of financing you can get now be sure to buy in a FHA approved condo. That means it meets certain standards. It also means if you want to sell it later someone else using FHA is a lot more likely to be able to get a loan to buy it. Condo's have HOA's. Some good, Some ridiculous, Some almost bankrupt. You need to be sure of what their rules are. You also need to know they are financially solvent. Also, look at the rental verses owner occupied rate of the complex. Plus the empty verses occupied units by %.
0 votes Thank Flag Link Wed Dec 23, 2009
Get another opinion.
Definitely talk to a well qualified mortgage broker who has the ability to shop around loan products and find you the best possible rates. An FHA loan is another option along with seeing if the owner would consider owner-financing.
If you need any assistance, feel free to contact me as my real estate focus is in Lincoln Park and Lakeview.

Happy Holidays!

Harry
0 votes Thank Flag Link Wed Dec 23, 2009
I would take to a different loan company or bank. If the condo complex is FHA approved then a 3 1/2% down would be min.
0 votes Thank Flag Link Wed Dec 23, 2009
That is not is not correct. With FHA,the down payment is 3.5% We also have FHA 203-k which is a loan
that you are able to do rehab work to the condo or a single family home and up to a 4 unit.

If you have any questions please email me at dario@therehabman.com
0 votes Thank Flag Link Wed Dec 23, 2009
Actually, I know a lender who is doing 95% ltv on condos and the only requirement is a score of 720 or better. It doesnt matter if the building is FHA or not. Check out Marc Jacobs at A & N Mortgage.

Programs vary from lender to lender.

Happy Holidays and Good luck!
Sari
Web Reference: http://LucidRealty.com
0 votes Thank Flag Link Wed Dec 23, 2009
If the condo was FHA approved only 3.5% down payment would be required. Max FHA mortgage amounts are $410,000 here in Chicago which supports a $424,000 sales price at 3.5% down. I can help you obtain FHA approval of the condo association.

Contact me at (847)293-2962 or by e-mail at steve@condo-approval.com

Steve Stenger
President
Condo Approval Professionals LLC
0 votes Thank Flag Link Wed Dec 23, 2009
Primary residence but was only wanting to put down 10%. The loan amount would be 435thd.
0 votes Thank Flag Link Wed Dec 23, 2009
Investor or as your primary residence?
0 votes Thank Flag Link Wed Dec 23, 2009
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