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Effective December 7, 2009, financing a San Mateo Condo will be a much more laborious and involved process. In this webinar, Chris Williamson of Mortgage California explains these new changes and how they affect San Mateo home buyers considering condos in San Mateo.
Citation preview
11/16/2009
1
Financing a Bay Area Condo
Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit
http://budurl.com/WebinarSlides
Tonight’s Speaker
Chris WilliamsonMortgage Advisor - Mortgage California
Phone: (650) 520-0915
www. SanMateoMortgageBlog.com
Questions During the Webinar
• Financing experts are available to answer questions throughout the presentation
• This is an interactive learning environment. You will get the most value from this program by having your specific questions answered.
• The only dumb question is the one you don’t ask
Chris Williamson [email protected] Phone: (650) 520-0915
Questions During the Webinar
You may type questions in at any time during the presentation –Question box on your screen
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
2
Financing a Bay Area Condo
Chris E. Williamson
Mortgage Advisor
Phone: (650) 520-0915
Email: [email protected]
Blog: www.SanMateoMortgageBlog.com
Purpose & Goals of the Webinar
Purpose
• Empower and Educate Home Buyers
Goals
• Share with you the things we’ve learned about financing a condominium
• Leave you more aware and informed about financing a condominium
Chris Williamson [email protected] Phone: (650) 520-0915
Overview
• New Challenges of Condo Financing
• Keys to a Successful Closing
• Pre-Approval vs. Pre-Qualification
• Two Types of Condo Financing
• New Rules of Financing a Condo
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
3
Condo Financing – New Challenges
A New and Different Lending Environment
Financing Condominiums is…
• More Difficult
• More Problematic
• More Time Consuming
Chris Williamson [email protected] Phone: (650) 520-0915
Condo Financing – New Rules
FNMA & FHA – Stricter Underwriting Rules
• Is Complex Approved?
• Is HOA “Cert” letter prepared?
• Are current HOA Doc’s Available?
Get Your Lender Involved Early!
Chris Williamson [email protected] Phone: (650) 520-0915
Financing a Condominium
Four Financial Keys for a Successful Closing
Get Your Mortgage Professional Involved Early
• Direct Lender
• Mortgage Broker
• Mortgage Banker
Get Pre-Approved
Know Your Financing Options
Plan for New Condo Approval Regulations
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
4
Get Your Mortgage Advisor Involved Early
Financing Solutions to Match your Buying Needs
▫ Determine What you Can Afford
▫ Down Payment and Closing Costs
▫ Programs that Meet your Short & Long Term Goals
Chris Williamson [email protected] Phone: (650) 520-0915
Get Your Mortgage Advisor Involved Early
Work with Your Condo Specialist to
▫ Find the Right Complex
▫ Structure Contract to Reflect Loan Program and its Approval Requirements
▫ Use Contract Contingencies to Protect Yourself
Chris Williamson [email protected] Phone: (650) 520-0915
Pre-Approval vs. Pre-Qualification
Get Pre-Approved, Not Pre-Qualified
• Pre-Qualification
▫ An informal estimate of what you can afford
• Pre-Approval
▫ A loan commitment from a reputable lender
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
5
Mortgage Pre-Approval
A Pre-Approval Requires Verification of…• Income
• Asset
• Credit Score
• Continuing Liabilities
A Pre-Approval Gives You...• Purchasing Power▫ A Pre-Approved Buyer is a CASH Buyer
• The Upper Limit of What You Can Afford
Chris Williamson [email protected] Phone: (650) 520-0915
What is a Genuine Pre-Approval?
A Formal, Firm Commitment to Loan…• Employment, Income, Assets, Debt and Credit History and Score Substantiated• Availability of Down Payment and Closing Costs Verified
Chris Williamson [email protected] Phone: (650) 520-0915
Why You Need a Genuine Pre-Approval
A Loan Pre-Approval
• Demonstrates your credit worthiness• Determines your purchasing power• Determines your financing options
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
6
Why You Need a Genuine Pre-Approval
You won’t waste your time looking at homes you cannot afford.
Use the the financing contingency period to approve the complex.
Chris Williamson [email protected] Phone: (650) 520-0915
Two Types of Loans Today
• FHA
▫ Government Insured
• Conventional
▫ Not Government Insured
Chris Williamson [email protected] Phone: (650) 520-0915
Conventional Financing
• “In-the-box”
• Down Payment
▫ 5% down with loan amounts below $417,000
▫ 10% down with loan amount $417,001-$729,750
▫ Higher mortgage insurance than FHA
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
7
Conventional Financing
• Ideally Put 20% Down
▫ Best interest rates
▫ No Mortgage Insurance
• Condo Requirements Set by Fannie Mae
▫ Not by the lender
Chris Williamson [email protected] Phone: (650) 520-0915
FHA Financing• Storybook Loan
▫ Less stringent on credit scores and credit history
▫ More flexible on work history
▫ No reserves required
• Down Payment as Little as 3.5%
• Mortgage Insurance Cheaper than Conventional
• Condo Requirements Set by HUD
Chris Williamson [email protected] Phone: (650) 520-0915
Complex Approval
Condominium Complex Approval is Determined by the Financing You Choose
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
8
Quickest & Easiest Way to Get Approval
Choose a Complex on the
• Fannie Mae Approved Condo List
▫ Conventional Financing
• FHA/HUD Approved Condo List
▫ FHA Financing
Chris Williamson [email protected] Phone: (650) 520-0915
Not on the Approved List?
• Complex Requires a “Spot Approval”
▫ Takes More Time
▫ Adds Additional Steps
• Important to Get Your Lender Involved Early in this Process
Chris Williamson [email protected] Phone: (650) 520-0915
New Rules for Approvals
• Effective December 7, 2009
• Conventional Financing Easier than FHA
▫ Automated System Determines Eligibility
• FHA More Laborious Process
▫ Review and Approval by Underwriter Determines Eligibility
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
9
Documentation Needed
• Condo Questionnaire/HOA Certification
• All Condo Legal Documents
• All CC&R’s
• Financial Statements and Budget
Chris Williamson [email protected] Phone: (650) 520-0915
Requirements for Approval
• Complex Must Have 2 Units or More
• Max 25% of Total Floor Commercial
• Max10% of Units Owned by One Investor
• Max15% of Units Delinquent in Fees
• FHA: Minimum 50% Sold
• Conventional: Minimum 70% Sold
• Walls-in Insurance Required
Chris Williamson [email protected] Phone: (650) 520-0915
Requirements for Approval
• 50% Owner Occupied for Existing Condos
• 70% Owner Occupied for New Construction
• No Litigation
• Reserve Study
▫ No more than 12 months old
▫ Must show project is 60% funded
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
10
Requirements for Approval
FHA Only Requirements
▫ Complexes with 3 or less units, no more than 1 unit can be encumbered by FHA financing
▫ Complexes with 4 or more units, no more than 30% of the total units encumbered by FHA financing
Chris Williamson [email protected] Phone: (650) 520-0915
Lengthy Approvals Won’t Last Forever• New Regulations Give Lenders Power to Approve Complexes
• First 5 by Each Lender Must go to HUD or FHA for Approval
▫ Can take up to 8 weeks
• After First 5, Should Move Much Quicker
Chris Williamson [email protected] Phone: (650) 520-0915
My Job As a Mortgage Professional
• Package the Transaction to Demonstrate
▫ Credit worthiness of the buyer
▫ Value of the unit
▫ Financial health of the association
• Financing Solutions to Match Buying Needs
▫ Down Payment and Closing Costs
▫ Programs that Meet your Short & Long Term Goals
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
11
My Job As a Mortgage Professional
• Structure an Affordable Monthly Mortgage Payment
• Find Most Competitive Interest Rates
• Compare Programs and Lenders
• Minimize Out of Pocket Costs
Chris Williamson [email protected] Phone: (650) 520-0915
Knowledge is the Key
• Don’t Use the Media as Your Only Resource
• Don’t Fall into the Trap of Online Lenders
• Know All Your Options
• Choose a Mortgage Professional you trust, have confidence in, and feel comfortable with
The opportunity is out there, you just have to take advantage of it!
Chris Williamson [email protected] Phone: (650) 520-0915
The Opportunity is Out There
• You Have the Perfect Storm▫ Interest rates are at historic lows▫ Realistic home prices
Find a Loan First, Then Find a Home
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
12
Resources You Can Use at Home
Chris Williamson [email protected] Phone: (650) 520-0915
SanMateoMortgageBlog.com
Chris Williamson [email protected] Phone: (650) 520-0915
Financing Questions?http://sanmateomortgageblog.com/ask-a-question
Chris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
13
Webinar: Tax Credit Explained
Guide to the Expanded and Extended Federal Home Buyer Tax Credit
Monday, November 23rd at 7pm
Sign up at
http://budurl.com/TaxCreditWebinar
Chris Williamson [email protected] Phone: (650) 520-0915
Enjoy this Webinar?
• Please help us spread the word by telling your friends and family.
Chris Williamson [email protected] Phone: (650) 520-0915
Apply OnlineChris Williamson [email protected] Phone: (650) 520-0915
11/16/2009
14
Free Consultation
Chris Williamson
Phone: (650) 520-0915
Email: [email protected]
www.SanMateoMortgageBlog.com
Chris Williamson [email protected] Phone: (650) 520-0915