Before I'd offer you any "answers" I have a few "questions" about your question before I just make assumptions.
If you must do an FHA loan, then this doesn't sound like the building for you. If you're not sure about non-FHA loan options available to you, then feel free to email me and I can send you a list of lenders that I'd suggest you call to investigate your lending options.
If you're committed to Burr Ridge, must you buy condo or are you also considering other property types (single family homes, townhomes, etcetera)? If you're open to other property types, then you might want to begin investigating short sales or foreclosures of different property types that might be priced very similarly to condominiums in the same area. And these other property types might not have some of the same lending and/or ownership obstacles as the condominium complex you're describing.
If you'd like to discuss your options generally or get a referral to an agent who specializes in that particular geographic area, then feel free to contact me at any time.
Broker Associate, Keller Williams Realty Chicago Consulting Group
716 E. 47th St. Chicago, IL 60653
(773) 418-0640 (cell) (312) 577-0985 (fax)
I like the way you phrased your question because it opens up a nice dialogue. As a lender, I can tell you that condo financing has gotten increasingly stringent over the last five years for exactly the reasons Philip gives. With prices dropping, people who have recently bought (some of them with no money down, which was available until 2007 for pretty much everybody) are walking away from their granite countertops and stainless steel appliances, and not looking back. This hurts everyone else in the fledgling association.
So lenders (as well as Mortgage Insurance companies) have been tightening restrictions on condo financing, trying to weed out as many of the buildings that are in trouble while still providing finacing to well-qualified buyers.
We need to qualify not only the borrower, but the building as well, and we are frequently underwriting to not only FHA , FNMA or FHLMC guidelines, but also to the MI Company (for conforming loans) as well as any credit overlays the end investor may have. (We operate as a Mortgage Bank, so we sell to all of the major players.)
With all these changes, it's easy for this information to not get out to the people that it should, because NOT ALL THE NEWS IS BAD. You, Matt and Linda need to know that for many first time homebuyers, there are conforming loans available with only 5% down, and many different PMI plans are available, including some with NO MONTHLY MI PAYMENTS AT ALL.
This "5% Solution" is available to those with credit scores over 680 and 5% of their own funds to put down. Closing costs can still be paid for by the seller, so the difference between conforming and FHA is only 1.5%! And most FHA lenders require a 640 score, so the difference in FICO scores is neglible as well.
So, if any of you (Kalopedi, Matt Laricy or Linda Dressler) would like to know more about these programs, please feel free to give me a call or shoot me an email. If you (Kalopedi) would like to start the process, you can also go to my website, and click on ... well ... "start the process" for a Free Confidential, Online application.
Talk to you soon,
Senior Mortgage Consultant
If that developer goes bankrupt or loses the properties to foreclosure, this could have a devastating effect on the association (and their coffers) as well as potentially driving down the value of sold units.
Frankly I would be wary of buying into a building with so few sold units unless I had strong proof of the liquidity of the builder and assurance that the unsold units won't be either heavily discounted or returned to the bank. The risk is just too great.
You need to find out everything about condos these days to ensure you can get a loan. If you can't do FHA, you usually need a good credit score over 700-720 and a good percentage down - 20% to do this deal. Plus, you need to see the condition of the association. I would look into a lender who knows condos first before attempting to get the condo association to do FHA. It is an option and doesn't take forever, but could take a couple months. Also depends on how much rental in the building, etc.
If you need help on this and the name of a condo lender speciality, give me at call at 888-788-9544. Condos can be tricky, so you can know what you get into before you jump. But they can be a great investment for home ownership, rental, etc. at this time.
Americorp Real Estate
Brokers Associate, e-PRO
If you are going FHA lending, that poses a problem for you. I have a lender who will work with the condominium association to help them obtain FHA Approved status if it is possible... feel free to contact me directly should you want more information.
Thank you and Good Luck!
Linda Dressler, RealtorÂ®
SRES, SFR, ADPR
In most of these projects the potential risks are usually greater than the potential gains, unless you pick up one of the short sales/foreclosures. Be careful.