Tips on buying and selling condos in FL...mortgage guidelines have changed.

Are you trying to sell or buy a condo in the current real estate market? Well, it may not be as easy as in previous years. However, if you know how to navigate the current mortgage waters, you may have an easier time.

First, here is the current issue. Due to declining values in Florida, mortgage insurance companies will no longer finance condos here. This means if you are a buyer, you must go FHA (primary residence only) or have a minimum of 20% down to be considered for conventional financing.

Even with 20% down, there are many considerations to make in the condo approval process that could eliminate the project for financing. FHA maintains an approved list of condo projects and only those projects are eligible for financing using an FHA loan. FHA provides spot condo approvals but guidelines typically eliminate the project and explain why the condo is not on the list to begin with. Typically those reasons are as follows:

● The HOA budget is suffering due to foreclosures where owners are behind on dues.
● There is a pending lawsuit.
● There is too much exposure by lenders in the project.
● There are too many investors in the project (50% or more must be owner occupied).
● Commercial space exceeds 20%.
● The owners not in control of association.
● There are weekly or monthly rentals.
● There is a front desk or cleaning service.

The bottom line...

If you are selling a condo:
Have your Realtor find out if your condo is already approved. If it's not approved, look into having your condo approved ahead of time. Speak to a mortgage specialist who has FHA experience and can help you through this process. Once you get the approval, you should advertise the approval to attract buyers.

If you are buying a condo:
FHA/VA: If you stick to the approved condo list, then you can have maximum financing. FHA is currently 3% (10/1/08) and VA is 100%. These financing options are for owner occupied properties only. Visit this website for complete list of FHA?VA approved condos.

Conventional: Due to mortgage insurance restrictions, in FL you will need a minimum of 20% down. If you are buying a primary residence, the more money you put down, the less important it is to get the condo approval. If you are buying a second home or an investment property, the buyer, as well as the condo project, needs to be approved.

Remember, this is ONLY if the buyer needs financing. If you are an owner or investor buying with cash, then you don't need to worry about these guidelines.

If you have specific questions while purchasing or selling a condo, please speak with your mortgage specialist for more details. I am not a mortgage expert.

Beth Hobart

Some information for this blog was taken from an article by Synergy Mortgage in Oviedo, FL.