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Philadelphia Condos & FHA: Even if You Qualify... Your Condo May Not

By The Somers Team

Real Estate Agent with The Somers Team at KW Philadelphia

July 14, 2009 10:57 PM

Philadelphia Condos - Even If You Qualify, Your Condo May Not !

I always say to every buyer I ever come across...

"Talk to a Local Mortgage Broker before you start shopping for homes !"

But, now I have added something to that line. I added...

"... and let the Mortgage Broker know what type of property you are looking to buy."

Why did I add that you ask ? I added it because even if you qualify for a particular loan product such as FHA and VA, the property you want to buy may not fit the FHA guidelines. Your loan will be denied and Condominiums - financing options that is a very frustrating situation for a buyer and a seller who entered into an agreement without being fully informed. Add on top of that the 25 to 30 Philadelphia condos that were shown to the buyer and that is a lot of time wasted between the buyer agent and the buyer !

Some other homes that may not fit the loan you qualify for are: "Handyman Specials", "TLC" properties, "Short Sales" and the like.

Philadelphia Condos are very difficult to finance with an FHA loan because the FHA guidelines have stipulations. For example, information such as: owner occupant ratios and the length of time the governing association has been in control, can eliminate the use of that loan product for certain condos. Now, in Philly, we have a lot of new construction condos where the developer still owns the majority of the units or there is a very high number of rental units in each condo building since we are in a heavy urban setting. Those 2 items alone have eliminated the use of FHA loans for many of my clients. VA requirements are even stricter and require building approval ahead of time before a loan can be processed.

So, long story short... make sure your mortgage person has the inside scoop regarding the Philadelphia condo building in addition to your personal financial info. Below are 3 simple questions a Buyer, Seller, or Realtor can use to help reveal the info needed to see if the loan and the house are compatible.

What type of loan are we using? Conventional, FHA, VA ...
What type of property are we buying? Single Family, Multi Family, Shell, Condo, Commercial...
Do we qualify for any other type of loan?

Once you get through the due-diligence of financing, it is time to be ready for your home inspection:

Home Inspections: 4 More Tips for Buyers, Sellers and Realtors

Home Inspections: 4 Tips to Avoid the Buyer and Seller Freak-outs !

We hope this information on Philadelphia condos is helpful to both buyers and sellers ! If you find the information informative, please subscribe to our blog ! Is only a click away ! If you are in our neck of the woods, please contact us via phone or email or ask about our new office location in Northern Liberties !

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If interested in buying or selling properties in Philadelphia, contact Chris and Stephanie Somers at thesomersteam@yahoo.com or 215-400-2612 . You can connect with us on Facebook and Twitter . For investment properties, check out our new investor site at Philly Investor Hub and ask us about Philadelphia Foreclosures and Short Sales .

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Bill Gassett

RE/MAX Executive Realty - Hopkinton, MA

Metrowest Massachusetts Real Estate

Certainly A good idea to do all the research necessary when it comes to financing. No one likes surprises here!

Jul 15, 2009 12:44 AM

Stephen Kappre

KW Hometown - Mantua, NJ

Helping You Home

Great point - I recently went through a transaction with a buyer who had to decline on a SFR after inspections. When she came to terms on another home, she failed to tell me (and I failed to ask) that it was a two unit row home. We got it done, and your point is well taken. Personally I think our pre-approvals from lenders should be far more descriptive, including taxes, loan type, purhase price, and a slew of other things. Sounds like a post in the making ..... ;)

Jul 15, 2009 12:51 AM

Hannah Williams

HomeStarr Realty - Philadelphia, PA

Expertise NE Philadelphia & Bucks 215-820-3376

CHRIS and STEPHANIE ..I would hope you would do your homework first..I always check with my mortgage loan officer first when selling a condo..sometimes spot approval is necessary if not on the approved list..I closed 5 this month..no problems..Thanks for the info

HELPFULHANNAH

Jul 15, 2009 01:30 AM

Jason Sardi

Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC

Your Agent for Life

This is very important. You may be the greatest borrower in the world (good assets, great credit, etc) but sometimes the property itself can be an obstacle in obtaining a loan. I've only dealt with a few of these in Pennsylvania, they are more prevalent in some of the other states I'm licensed in. Good work in getting this out there.

Jul 15, 2009 01:43 AM

John Slocum

Premiere Property Group, LLC - Vancouver Washington - Vancouver, WA

Broker, SFR - Vancouver WA Real Estate

Excellent points. Condos are becoming more important in our area as more folks want to live closer to the downtown area, and knowing the differences in this type of financing can make the process work smoother. If there is a lawsuit against the condo association (even if it is trivial), as there was recently on one of the nicer buildings in Vancouver, even conventional lenders close their windows! Thanks! John

Jul 15, 2009 01:46 AM

Sheila Moran

RE/MAX Access (Garden Ridge, San Antonio, New Braunfels) - New Braunfels, TX

SanAntonioSheila.com, RE/MAX Access, 210-32

Chris & Stephanie,

There hasn't been condo's built in SA for many years UNTIL recently. Most were older units until our downtown started blowing up with a few high rises.

I know that in the past when I have had something listed Agents are SHOCKED to learn (after showing how many units?) that their Buyer can't purchase the CONDO OF THE THEIR DREAMS.

Thanks for reminding everyone to do your homework before you take those clients out!

Jul 15, 2009 04:45 AM

Nyssa Smith

Keller Williams Advantage Realty - State College, PA

REALTOR, State College Area Real Estate

This is sooo true! I almost had one fall through because the ratios of owner occupied vs. rentals were so close! But it ended up coming out ok. Thankfully! I was representing the seller and they did not want to have to put their condo back on the market! Fortunately, it turned out ok and we successfully closed! Seller is so happy!

Jul 15, 2009 11:14 AM

The Somers Team

The Somers Team at KW Philadelphia - Philadelphia, PA

Delivering Real Estate Happiness

Bill - Absolutely ! Every day in our area there are buyers looking at condos expecting to get financing through FHA which is a waste of everyone's time if the condo association will not qualify for FHA.

Steve - We are glad to spur some thoughts for related blog posts. When you do it, please come back and leave a link for it !

Hannah - I know you are always knocking out some condo sales in NE Philadelphia. Yes, the homework is important for any buyer agent to make sure that their client can get financing. Also, when a deal comes in on a condo or another unique property, the listing agent needs to be very familiar with the financing options and stumbling blocks as well in order to make the best recommendation to the seller in terms of how to respond to that deal.

Jul 15, 2009 11:38 PM

Anonymous

Newcondosonline

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However, when you are looking for a home in the birthplace of American democracy, it is only natural to get romantic about the past. If you want to live with the charms of bygone era, you can explore the Spruce/Pine corridor here in Center City Philadelphia, which is home of a number of traditional Brownstone Philadelphia condos. These are low rise condominiums which have always remained desirable property choice among the home buyers. They are excellent to look at and practical to live. You can literally walk to your workplace in the downtown Philadelphia from any Spruce St/ Pine St homes.

Aug 04, 2009 09:40 PM