CONDOMINIUMS: Love 'em or Leave 'em. Views From the Differing Angles ...

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Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

 

Condos:  Love 'em or Leave 'em

Viewing Condominiums From the Differing Angles:  

Buyer, Seller, Condominium Association, Lender, Appraiser

 

 

     For Buyers:  Condominiums can be a great way to participate in the American Dream of Home Ownership.  Buying a condominium ends throwing away money on rent.

     Gene Mundt, Chicago Bancorp Condominiums: Views from Differing Angles blog Condominiums allow first-time home buyers an affordable  entrance into the housing market that a single-family residence might not.  Yet, it offers them a lifestyle that eliminates maintenance of landscaping and property exteriors. 

     Condominiums can provide that intermediate entrance into owning property and one where they can learn the "art of home ownership".  They can dip their toes into the proverbial waters at their own pace.  Owners share amenities that they otherwise might not be able to afford, such as pools, clubhouse, fitness centers, and more. 

     But the consideration of condominium ownership has increasingly grown to include more and more "asteriks".  Things to be considered prior to buying.

    Someone considering a condo purchase must do their homework and educate themselves about concerns surrounding condominium ownership as a whole ... plus that of the specific property they are considering.  And that knowledge must include information regarding the property itself, ownerships and possible rentals within the condominium project under consideration, and the Condominium Association involved in that project.  

     While possibly simplifying life AFTER purchase, the act of buying a condominium is NOT simple for a current potential buyer.  There is much to consider.  (Later in this post, I will explain how the choice of mortgage lender can simplify this process and greatly enhance the potential success of a condo purchase.)

     For the Seller:  Perhaps it has become time to consider moving on.  A growing family, the need for more space, a desire for a yard, and more can motivate a move.  Ownership of a condominium likely served the Seller well, for all the reasons mentioned above.  Now it is time to move on. 

     But of growing concern is the "sale-ability" of their condo property.  And at the top of the list of concerns is the potential for new owners/buyers to finance their purchase.

     The hard, cold facts of selling a condominium is currently this:  the reckless lending policies of the past and the many foreclosures found within this type of home ownership presently penalizes condominium sellers.  Losses suffered elsewhere (even in other states) have taken a heavy toll.

     Condominium Associations are being called upon to make some prettyGene Mundt, Chicago Bancorp Condominiums:  Views from Differing Angles blog heavy-duty decisions.  Many of those decisions directly influence the "sale-ability" of the condominiums under their rulings.  That causes many condo owners to question whether their Condominium Association should have the right to initiate a ruling that would ultimately restrict their ability to sell, or to rent their condo unit. 

     More and more often I find myself as a Mortgage Lender offering this advice to those considering the purchase (or sale) of a condominium:  Be prepared to be involved in your Condominium Association.  You protect your ownership and future property interests best if you are.

     Condominium Associations:  Associations have to maintain the integrity and long-established Declarations and By-Laws written and currently in place.  (BTW, this is probably a boiler-plated, attorney-drafted version passed and around since the early 80's).

     Many condominium projects currently find themselves un-approvable by FHA, or they simply have decided not to allow FHA financing.  All this while Private Mortgage Companies have tightened guidelines on Conventional Loan Options. 

     In many cases, condominium projects have limited themselves in financing terms to 20% down payment buyers ... or cash transactions.  How many of those buyers do you know??  Especially when condominiums draw a large portion of their ownership from first-time buyers and/or single buyers?? 

     It's easy to see that decisions made carry ramifications for Sellers and potential condominiums buyers, as well. 

     For Lenders:  Without knowing the "current statistics and status" of an Association, mortgage lenders will not even consider an underwriting review of a Borrower's loan file.  In fact, given the larger percentage of defaults and foreclosures to be found on condominium units, Fannie Mae, Freddie Mac, and even FHA, have "re-evaluated and re-written" underwriting guidelines.

     In addition, private lenders and servicers have added their restrictive "overlays" concerning condominium lending.  Why??

     Because the general health of any Condominium Association can lead to defaults, foreclosures, and bank losses, simply because they can affect an owner's willingness and ability to make timely mortgage payments and Homeowners Association payments.

     For Appraisers:  Appraisers have to do more work to obtain the numbers and Association statistics.  They also have to be knowledgeable and recognize the subtle differences that can impact value and marketability of a given condominium unit in their reports.  

     Appraisers must ascertain the legal ownership of a  condominium unit that could be either in a Condominium Project ... or a Planned Unit Development.  A PUD necessitates the need to cite "like properties" as Comparables, write the report on the appropriate appraisal form, and understand and convey those differences to a report reader (i.e., Lender, Underwriter, Agency, etc.).

     Summary:  All the above considerations must be weighed.  Simple problems, right? 

     No, certainly not.   And all must be taken into consideration when considering the purchase of a condominium as a potential buyer ... and also by the agent when considering properties to show their clients and when referring a mortgage lender.

     A buyer and their agent both must consider the success rate, knowledge, and condominium "education level" of the lender being considered for use during a transaction.  The bottom-line to the successful purchase of a condominium might just lie within that lender chosen. 

     Choose and work with a mortgage lender that knows how to navigate condominium lending ... and also the FHA approval process for condominium projects (which may be necessary and/or helpful) .. and you greatly increase the likelihood of successfully completing transaction's success.  Choose otherwise and failure is a likely outcome. 

 

     *  Should you be in need of an experienced mortgage lender well-versed and successful in condominium transactions, please do not hesitate to contact me at:  Direct:  815.277.4036   Cell/Text:  708.921.6331   Email:  gene@chicagobancorp.com   Website:  www.genemundt.com   Skype:  630.219.1316.  I look forward to assisting you.  

 

 

    

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Topic:
Home Buying
Location:
Illinois Dupage County
Groups:
Realtors®
Mortgages
1st Time Buyers
Condo Specialists
Advice for Sellers
Tags:
condominiums
mortgage lender
appraising
condominium association
selling a condo
buying financing a condo

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Rainer
182,493
JodiAnn Garone
Century 21 Action Plus Realty - Freehold, NJ
Bringing you Home!

Gene,

Great post I believe that you have covered it all :) Happy selling

Jul 24, 2011 12:53 PM #1
Rainmaker
1,240,821
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

JodiAnn:  Thank you ... I'm glad you found the post helpful.  Appreciate you writing me and commenting ...

Gene

Jul 24, 2011 02:55 PM #2
Rainmaker
601,337
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Gene - First and foremost, love the new pic Grandpa!  :)  Secondly, sounds like your condo market is very much like our condo market here.  Don't even get me started on trying to get complexes and their associations re-approved with Fannie, Freddie and/or FHA.  How long is your approval process running?

On another note, I've been finding the HomePath condo process a lot easier to work with.  There's some additional costs associated with this program and borrowers still have to be really selective about many of these properties (some are total dumps) but the condo process is a lot less hassle.

Jul 24, 2011 03:41 PM #3
Rainer
238,346
Anne M. Costello
Weidel Realtors - Yardley, PA

Gene: This is an excellent, very readable post on a complex issue. Am representing a seller on a very unique condo (7 units in a 1920's riverfront mansion) that has lost its FHA ability. In fact, not one condo in Yardly Borough, where I work, is currently FHA approved. Have gotten some information from my in-house lender and have tried to decypher the FHA stuff. Any thoughts!

Jul 24, 2011 10:43 PM #4
Rainmaker
1,240,821
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Donne:  Any process is too long typically.  But it's an option and something that I pursue on my client's behalf.  I'm giving some seminars in the area to help others better understand the process too.  Maybe that will help the deep well of backlog we see here in the Chicagoland area.   Definitely where my appraising background helps-out some!  And the HomePath info is interesting.  I haven't had that many approach me on it ... but glad to hear that you think the process is easier to navigate.  Will pick your brain should I need some help moving forward.  And the pic ... I get my little sweetheart as much as possible.  This grandpa thing is just amazing.  She's so much fun!  A real personality.  We're lucky both of our boys live so close ...

Anne:  Will give you a call later today, to find out more.  Or .. always feel free to contact me too.  I'll be glad to assist where I can and help you and your client(s).  Talk soon ...

Gene

Jul 25, 2011 03:18 AM #5
Rainer
478,183
Not a real person
San Diego, CA

I'm living in one of my condos right now while I rebuild a house that burned in 2003. However, I'm kind of getting addicted to having an Olympic size swimming pool, big span, tennis courts.... I'm thinking that after the house is rebuilt, I'll just sell it and enjoy the condo living!

Happy Tuesday!

Jul 25, 2011 10:59 PM #6
Rainmaker
1,240,821
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Totally understand, Russel!  Who wouldn't love having some extra amenities?  Best of luck with the renovations on the house and no matter what you decide in your future .... Enjoy!  Thanks for writing ...

Gene

Jul 26, 2011 02:10 AM #7
Ambassador
3,681,846
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Gene, back in the sixties, I worked for Eastern Airlines.  And one of the secretaries in the marketing department came up with a slogan, "Winter, Love It Or Leave It."  It  became a huge marketing campaign for which her boss stole the credit.  We all hated him.  And your post brought back the memories.

Jul 26, 2011 02:54 PM #8
Rainmaker
1,240,821
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Well Patricia ...  I'm hoping it brought a few good things to mind too!!  lol  But what a rat the boss was!  Can understand why his staff might be a bit perturbed with him ...

Thanks for telling me the story ...

Gene

Jul 27, 2011 08:32 AM #9
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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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