Understanding Condo Project Approvals

By Author: Jamie Hanson
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No matter if you're on the buying side, the selling side, a house owner looking to re-finance, or maybe if you're a sole part of the condominium's homeowner's association, many don't understand the need for complete condo project approvals. Contrary to earlier in this decade if bank's actually did not really care whether projects were "approved" or not, this element could practically make or break any kind of purchase or re-finance transaction in today's more rigid banking setting. Let me preface this information by stating that this is somewhat of an advanced level review and I can have future pieces which go much deeper into the nuts and bolts of particular condo project approvals.

So how Condo Project Approval Status Influences Present Owners:

Lets say for conversation's reason that you purchased your condo unit five-years ago and at that time the 30yr fixed interest rates were 6.000%. You would save a lot of money every month in case you took benefit of today's lower interest rates which while composing this post are near all-time lows of only 4.000% on that same 30yr fixed mortgage loan. So now hold out just ...
... a minute - Before you can get approved for re-financing your current mortgage loan, the lending company will need to try to "approve" your condominium task, or perhaps in simple terms, confirm if all key aspects of the project adhere to the most current "Agency" tips. The company in question is generally Fannie Mae. This is when factors can get tough because what was once considered "approved" in 2005 may very well not be approved in today's much tougher lending arena. As a general guideline, before contacting loan providers for re-finance quotations, first contact your home owner association to look into the status of your building's project approvals.

The way Condo Project Approvals Influence Sellers:

Numerous people would accept that if we look around our streets nowadays, it appears as if there are many people selling their properties than in the past. Everywhere we look, one can find more and more "For Sale" indicators popping up. Maybe you are asking, how can condo project approvals impact those property sellers? Here is the result: If the initial developer and/or the current home owner's association never ever concerned with (the now essential) condo project approvals, how are any new possible buyers going to be able to purchase their home? The depressing truth is that it's going to be really hard because virtually any loan provider will need this before granting your buyer for a mortgage loan. For this reason condo project approvals are the initial thing property owners need to look into before detailing their home for sale. Furthermore, if around half of all home owners are using FHA financing these days, it means that all possible buyers of the property are instantly reduced to 50 percent if there is just a "Conventional" (Fannie Mae) condo project approval available rather than both Conventional and FHA. As a principle, if you intend on buying, selling, or simply just re-financing, first examine whether the condo project approvals currently available. If the subject property's Home Owner's Association states they don't have condo project approvals, or maybe the condo project approvals are expired, after that your next call should be to a competent loan provider or advisor who is able to assist you in getting project approved. There are a select few specialists around who can perhaps do these free of charge provided that they get the business in regard to the mortgage loan. Getting the condo project approvals in place prior to advertising your property for sale will significantly improve your chance to sell the property, and also help set your property besides the masses

So how Condo Project Approvals Impact Home Buyers:

Lets say you are out searching for home of your dreams in the town where the action is and you have got things narrowed down to your most loved location, proximity to the night life, the lake front, as well as your favorite live concert locations. I bet the very last thing you are considering is if those structures have updated condo project approvals, correct? Well you might be in for a rude awareness since perhaps structures that actually had obtained condo project approvals could now be expired or void. Worse, numerous structures which obtained condo project approvals in ... say... in the year 2005, may not perhaps be capable of getting approved any more with the current significantly tougher tips. For instance, on freshly built structures (such as condo "conversions" from lease buildings) there seemed to be a zero(0%) percent "presale" limit as lately as in 2007. Which means that condo project approvals were granted before just one buyer was in contract to purchase a unit there, and 100% of the liability of the project succeeding was on the shoulders of the developer. In today's lending setting, all conventional borrowed credit must adhere to the Fannie Mae project approval guidelines which need a 51% presale limit to be fulfilled before a single closing could take place in the property. So what?! you might be asking? Yes, it means that a high rise with three hundred units must have 151 units in contract prior to the condo project approvals are in place and perhaps a single Conventional loan can close there. So now to be fair there are a couple tricks builders try using to obtain around this such as "phasing" the project whenever feasible. Additionally, there are usually a couple of local banking institutions that can lend their own funds (portfolio products) to perfectly certified borrowers in order to fill the gap between the first half of the units selling all the way to the project gaining its condo project approvals at 51% sold. But, these portfolio loans typically have less positive terms, are ARM's (adjustable rate mortgages), and generally include high rates of interest than their Conventional loan counterparts. It should be mentioned that HUD has stepped up their endeavours to help the condo market by temporarily decreasing the presale requirement on the FHA system from 51% to 30% on new development projects, however I have yet to find out a whole lot of extensive good effect as an immediate response to this effort by the Federal Government. In short, look into the building's condo project approvals before putting an offer on any property or home.

Finally, when you are buying, selling, or maybe just re-financing your condo, make sure the Fannie Mae and/or FHA condo project approvals are available and not expired.

Author Joe Karns is marketing and sales head committed to bringing his subscribers pertinent and helpful data. Need a free consultation from a genuine business specialist regarding your condo project? Have a look at Joe Karns in the link that follows for more information and expert advice concerning FREE condo project.

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