"Solutions Not Just Answers"
With dramatic changes within the mortgage sector over the past 4 years, Government insured FHA loans have become a common denominator in many purchase and refinance transactions occurring in today’s market place.
Many buyers today often meet the requirements needed to obtain a mortgage, however their lack of down payment funds exists. By utilizing an FHA loan versus conventional financing, only 3.5% of the borrowers own funds are necessary in order to obtain a FHA traditional forward mortgage, utilized commonly today by First time home buyers. In addition seller’s concessions and gift funds are acceptable in most cases. On the other side of the spectrum we have the senior buyer/refinance market. FHA insures several Reverse mortgage products in which only age and property value are the main qualifying factors necessary to obtain this type of mortgage. Minimum age requirement necessary to obtain an FHA insured Reverse mortgage is 62. In early 2009 FHA introduced the Reverse mortgage for purchase product. With the use of this government insured FHA mortgage product an individual 62 or over is able to purchase a 1 to 4 family home, HUD approved Condominium, some manufactured homes as well as some PUD’s (Planned Urban Developments). For example a 62 year old borrower purchasing a $400,000.00 home needs approximately $170,000.00, which includes all closing costs to complete the cash portion of the transaction. The additional funds necessary come from the funds provided by the Reverse mortgage. The only financial responsibility of the borrower is to maintain real estate taxes, Home owners insurance and HOA dues if applicable as well as maintaining the property under the terms of the mortgage. When utilizing a Reverse mortgage for purchase or traditionally as a refinance the property must be considered the borrowers primary residence. With the use of the Reverse mortgage for purchase product the senior buyer is now able to preserve any additional cash available, eliminate monthly mortgage payments associated with a traditional mortgage as well as eliminate the need to purchase for 100% cash. Many Retirement age buyers choose to purchase in 55 and 62 or over communities if they exist in the part of the country they choose for retirement. In New York over the past 10 years communities of this type have become extremely prevalent many times falling under the classification of a Condominium. Prior to November of 2009 if an individual choose to use an FHA mortgage product, the mortgage company was able to get a spot approval on the particular unit, however HUD rules have since changed and now in order to obtain FHA insured financing the entire project must be HUD approved. Borrowers intending on using a VA loan in a Condominium transaction are limited to HUD approved Condominiums as well. Now that spot approvals are no longer allowed, complexes that are not HUD-approved rule out many first-time buyers, Retirement age buyers, Seniors 62 and over or anyone looking to use FHA or VA financing. This leaves only conventional loan products and niche-lender financing products. Conventional loans (loans that are ultimately purchased by Fannie Mae or Freddie Mac) require a minimum of a 10% down payment. However as previously mentioned many buyers today have limited down payment funds to put down on the home they would like to purchase.
By not being HUD-approved, the complex is ruling out a majority of these buyers. This could lead to increased marketing times for sellers as buyers are tougher to come by. This could also lead to a decrease in the prices of the units within the complex simply do to the laws of supply and demand.
Many individuals today reaching retirement age status are planing to sell their existing homes downsizing to a condominium for more carefree social living, where they don't have to maintain the property's exterior and grounds. In selling their homes, they may have enough money to purchase in the complex with large down payments or without having to obtain any financing at all, however HUD found that many retirement age buyers purchasing for little or no financing shortly after the purchase transaction occurred, they were seeking an FHA insured Reverse mortgage. By introducing the Reverse mortgage for purchase, the expense of a 2nd closing is eliminated.
Additionally any Condominium owner 62 or older seeking a traditional Reverse mortgage refinance commonly referred to as a HECM (Home Equity Conversion Mortgage) the entire complex must be HUD approved.
There are literally dozens of condo complexes in the Metro New York area that are not FHA-HUD approved but can be. Because FHA allowed "spot approvals" there was no reason previously to become FHA-approved. Now it is imperative as FHA loans are in such a high demand.
Many complexes in New York are already HUD-approved. However, if the complex was approved prior to October 1, 2008, they needed to get recertified on or before December 7, 2010. As the year of 2010 progressed, and more and more complexes become aware of the need to get recertified, the processing centers were bogged down with requests and delays resulted.
We can help complexes to become HUD-approved and to maintain their approvals. We can assist in coordinating with the management companies and/or the homeowner's associations to compile the paperwork that HUD needs and oversee the approval process. In addition, we maintain a database of approved complexes and monitor when their approvals expire. This way we can guarantee that their HUD-approvals will not lapse.
If you are a unit owner, seller or are looking to buy in a complex with an FHA loan, please contact me to make sure that the complex is approved. If it is not, we can assist in the complex's approval and to maintain its approval.
For more information please contact:
Steven Thall
Advanced Funding Inc
Licensed Broker NYS Banking Dept.
loans arranged with 3rd party providers
NMLS (Company 16567) (Individual 54232)
Cell: 631-926-4500 Tel: 631-539-7517 Fax: 631-623-1350
E: sthall@ourcustomersfirst.com
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