Monday, April 11, 2011

Be careful with Condominiums


Condominiums have become a real pain in the neck.  Fannie Mae has enforced and created new rules that have made the process more difficult.  Realize that there are 2 parts to getting approved- the borrowers financial pedigree AND the condominium approval.  Please look at the following items before jumping into a contract:

1.  Banks want to see that at least 70% of the units are sold/in contract/owner occupied.
2.  No 1 entity owning more than 10% of the units.  That includes the sponsor.
3.  Banks want to see at least 10% of the operating budget for the year in reserves.

These are not hard and fast rules for every lender but please be careful.

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