By Chris Muellenbach October 21, 2016
Of the 25 most popular condo buildings I show in Milwaukee's east side, downtown, and the Third Ward, only TWO were FHA approved. The others either allowed their approval to expire or never applied.
Despite popluar beliefs, here are some TRUE facts about FHA:
Source: FHA Review
- The FHA is not a Lender. They provide mortgage insurance.
- FHA loans did not cause the housing crisis.
- FHA insured loans are not related to Section 8 or low income housing.
- People using FHA loans are not statistically more likely to default.
- FHA approval is a privilege, not a right. Not all association’s will be eligible for FHA approval.
One of the most important obligations of a Condo Board and Property Manager is to maintain property values in their communities. One obvious way to do so according to many HOA attorneys is to apply for FHA approval to maintain or increase property values for residents. Maintaining and increasing values isn't simply a good idea for the Board, it is the Board Members fiduciary duty.
Top 5 Reasons Your Association NEEDS to consider becoming FHA approved
5. In 2017 more than 50% of all homes sold will be to first time buyers and Millennials
4. Your association is limiting its pool of buyers to 40% of people looking.
- 60% of new home buyers intend to use an FHA loan
3. Values of your association will increase with a larger pool of potential buyers
2. FHA loans are assumable
- What does this mean? The condo owner can sell their condo and the new buyer can assume the FHA loan (including the interest rate.) As low as interest rates are right now, this can be a an extremely valuable asset to the Home Owners Association. This means that in the future an FHA Loan can be assumed (including the interest rate) by a new buyer. With interest rates at an all-time low, this can be a very valuable asset to an HOA community.
1. FHA buyers tend to live in the property they buy. Meaning fewer renters in the building.
- No more than 10 percent of the total units in any condominium project may be owned by one investor. This restriction also applies to builders and developers, who may rent out unsold units. The FHA wants the majority of units to be owner occupied, and will look closely for factors that will make it otherwise.
- At least 50 percent of the units in the project must be owner occupied, or sold to owners who intend to occupy the units.
Read more at: http://www.moneyunder30.com/requirements-to-get-an-fha-loan-for-a-condo
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