With so many loans going FHA or CHFA (in Connecticut), it is more important than ever to be sure your condominium complex has the necessary approval to facilitate this type of financing. Prior to January, 2010, if a condo complex was not on the approved list, a spot check could be performed; and as long as the basic criteria was met, the process for FHA financing could usually be completed. This, however, is no longer the case. If condo complexes are not approved, sales of units most likely will take dramatically longer. Rather than the need for just 3.5% down and closing costs for an FHA or CHFA loan, a buyer securing conventional financing would need to come up with 20% down as well as cover closing costs. This puts non FHA complexes out of the game for the most part. This also affects owners who wish to refinance using an FHA loan.
What can you do?
Get your condo association to begin the process of FHA approval. See the link below from hud.gov. It is important for associations and all of their participants to realize that sooner or later they will benefit handsomely from this process. Who knows if and/or when the market will swing back to a majority of conventional loans? Don't wait for this to happen.
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf
Unfortunately, even many Realtors are not aware of this change in the market. They do not realize that if you are an FHA or CHFA buyer, there may be condominium complexes that are basically off limits. One needs to check the FHA site to see which complexes qualify. Below is the link to find out whether or not your complex is on the approved list:
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