I am currently in contract on a Condo in Long Island
My mortgage broker just informed me that I will need
We are the buyer:
25% down and not 20%
The interest rate goes up .25 (so Im getting 5.125 with credit score of 810)
And I will need $9500-$12800 toward closing and not the expected $3000-6000
This is all because its a Condo i was told
When we bought our Coop in Queens a few years ago we paid about $3500 in closing costs. We had a different broker then
Does this match anyones experienced?
Thanks for any info/knowledge anyone can give
Shop around.
As for rates...they fluctuate and the quote your receive one week might not be the same the next week if you didn't get your rate locked in. You can buy down the rate, and you can shop around...but if you are already under contract, re-setting the financing timer might not make sense. Talk to your agent about your contractual position. If you are flying solo...well, you might be an example of why you shouldn't do that. If you do rate-shop, you will likely find other lenders that will give you better rates, but with higher fees and closing costs. Don't get hoodwinked. Any lender should give you a full list of what it will cost to close and disclose all fees, upfront, and with the rate included. And strongly suggest you shop local mortgage brokers, not the national outfits who you are just a number to.
1. There often is a difference in the program between a condo and a single family detached residence. Sometimes it is a slightly higher rate and/or possibly a larger down payment.
2. There could also be a difference in the escrows vs what was originally projected creating a larger closing cost estimate.
That being said, I think 25% down for condo is high IF all other factors are also not a problem. Your credit score for example matters and can change the math on this.
Regarding lending tree. Here is what they do. They sign up various lenders for specific states or even zip codes. They charge each lender about $40-$50 dollars for every customer they refer to them. They will send your info to 4-5 different lenders. It may not be lenders that can necessarily help with your specific situation (ie recent bankruptcy, self employed, low down payment needed, etc). So, you may not really get directed to the right group of lenders.
I do not originate loans anymore but I am partnered with various lenders for my web site. My site asks specific questions that can help to fully understand what is going on with the person. I look at the situation for each person and then connect them with ONE lender ... but the right one for that scenario. Seems to work well for everyone.
Same rate, the standard 20% down.
Your closing costs sound high. I had a detailed breakdown on closing costs very early in the process. Get that info if you don't have it.
My credit score is between 790 and 800.
The condo association not meeting the Fannie Mae guidelines/threshold is the issue. I can't get too deep into the weeds on this because I am not a lender but I have encountered this same issue before representing a buyer...and this is the case with condos, it is SPECIFIC to condos, and your mortgage broker is probably being straight with you.
The new rules were made to mitigate their risk of that happening again. So it's 25% if a condo is a secondary residence and/or if the association does not meet reserve requirements and other capacity criteria. Lender should be able to explain this to you.
Same rate, the standard 20% down.
Your closing costs sound high. I had a detailed breakdown on closing costs very early in the process. Get that info if you don't have it.
My credit score is between 790 and 800.
You are buying it as a primary residence or secondary residence? Primary residence...the down payment for conventional lending 20% is probably right, and your specific condo association may meet all Fannie Mae guidelines.
The new rules were made to mitigate their risk of that happening again. So it's 25% if a condo is a secondary residence and/or if the association does not meet reserve requirements and other capacity criteria. Lender should be able to explain this to you.
Not quite. In short, here is how it went...
1. Politicians wanted to make sure that ALL Americans could somehow purchase a home if they wanted.
2. They forced lenders to offer subprime products. If they didn't, the lending institution would be fined daily.
3. Lenders developed those products but knew they were risky. So, they did not keep them in their portfolios. They bundled them in groups of 1000, got a rating on them (which turned out to be bullshit) and then sold them to investors (not Fannie and Freddie).
4. Investments went bad, the market crashed and the politicians blamed the lenders. Yes, some of them saw the opportunity to go overboard and develop programs over and above what was required.
5. The regulations got OVER tightened to the point where self employed individuals could not even refinance a home they were already living in.
6. Now, we are in a place where there are at least bank statement loans for self employed, FHA for individuals who have little to put down, USDA for rural (zero down), VA, etc
Quote:
the rules that have created this atmosphere were because of the housing crisis in '08. Fannie and Freddie purchased a bunch of mortgages that went bad. A great number of those were condo mortgages. Buyers' would default, the condos would fail because they didn't have enough money in reserves to recover and pay for upkeep and maintenance because the deed holders weren't paying their dues and defaulting, the values tanked, and now Fannie and Freddie were holding onto worthless paper.
The new rules were made to mitigate their risk of that happening again. So it's 25% if a condo is a secondary residence and/or if the association does not meet reserve requirements and other capacity criteria. Lender should be able to explain this to you.
Not quite. In short, here is how it went...
1. Politicians wanted to make sure that ALL Americans could somehow purchase a home if they wanted.
2. They forced lenders to offer subprime products. If they didn't, the lending institution would be fined daily.
3. Lenders developed those products but knew they were risky. So, they did not keep them in their portfolios. They bundled them in groups of 1000, got a rating on them (which turned out to be bullshit) and then sold them to investors (not Fannie and Freddie).
4. Investments went bad, the market crashed and the politicians blamed the lenders. Yes, some of them saw the opportunity to go overboard and develop programs over and above what was required.
5. The regulations got OVER tightened to the point where self employed individuals could not even refinance a home they were already living in.
6. Now, we are in a place where there are at least bank statement loans for self employed, FHA for individuals who have little to put down, USDA for rural (zero down), VA, etc
You are talking about the over-arching causes of the housing crisis. I am talking about the reasons for specific rule changes by Fannie Mae and Freddie Mac covering condos and their associations for them to purchase their mortgages. Two different things, although both related to the crash.
Quote:
the rules that have created this atmosphere were because of the housing crisis in '08. Fannie and Freddie purchased a bunch of mortgages that went bad. A great number of those were condo mortgages. Buyers' would default, the condos would fail because they didn't have enough money in reserves to recover and pay for upkeep and maintenance because the deed holders weren't paying their dues and defaulting, the values tanked, and now Fannie and Freddie were holding onto worthless paper.
The new rules were made to mitigate their risk of that happening again. So it's 25% if a condo is a secondary residence and/or if the association does not meet reserve requirements and other capacity criteria. Lender should be able to explain this to you.
Not quite. In short, here is how it went...
1. Politicians wanted to make sure that ALL Americans could somehow purchase a home if they wanted.
2. They forced lenders to offer subprime products. If they didn't, the lending institution would be fined daily.
3. Lenders developed those products but knew they were risky. So, they did not keep them in their portfolios. They bundled them in groups of 1000, got a rating on them (which turned out to be bullshit) and then sold them to investors (not Fannie and Freddie).
4. Investments went bad, the market crashed and the politicians blamed the lenders. Yes, some of them saw the opportunity to go overboard and develop programs over and above what was required.
5. The regulations got OVER tightened to the point where self employed individuals could not even refinance a home they were already living in.
6. Now, we are in a place where there are at least bank statement loans for self employed, FHA for individuals who have little to put down, USDA for rural (zero down), VA, etc
And by the way, Fannie and Freddie were the largest single purchasers and holders of those sub-prime mortgage securities and was the guarantor of a total $5 trillion of the nation's mortages in 2008...half of all mortgages in the United States...and all backed by the U.S. taxpayer. Yes, private investment houses held more all combined, but the two GSE's held the most by percentage when considering single entities.
Long story short, I either had to come up with another $50,000 or go with another bank. I didn't have the money and went with another lender which sucked because my interest rate went up by almost 1% and had to pay a lot more in closing costs not to mention a much higher monthly payment. In my opinion,Dodd/Frank is making it too difficult with people with excellent credit and the ability to own a home much more difficult. This is not my first time either, I have bought and sold numerous properties and this is our 8th and final home.
There are a multitude of reasons why they may want 25%. How many units are rented? How are their financials? What are the HOA fees? If for some reason I ever do sell and but another condo, it will be one where there are many units.
Long story short, I either had to come up with another $50,000 or go with another bank. I didn't have the money and went with another lender which sucked because my interest rate went up by almost 1% and had to pay a lot more in closing costs not to mention a much higher monthly payment. In my opinion,Dodd/Frank is making it too difficult with people with excellent credit and the ability to own a home much more difficult. This is not my first time either, I have bought and sold numerous properties and this is our 8th and final home.
There are a multitude of reasons why they may want 25%. How many units are rented? How are their financials? What are the HOA fees? If for some reason I ever do sell and but another condo, it will be one where there are many units.
I believe this is also related to the Fannie Mae guidelines, as well as owners vs renters occupancy %, and a bunch of other criteria. I researched a condo community in Pinellas that my client was buying, and every unit that was sold in the previous year or so was done with at least 25% downpayment or they paid cash. I got my client in there with a 20% downpayment, but I moved heaven and earth to do it. It took convincing the lender they had extra money (they were getting a sizable rebate from the utility company that I found in their budget), and a lot of convincing with the lender that because of that, they met the Fannie Mae guideline, and they finally agreed. It was a difficult deal but I saved my client around $35K out of pocket.
I have been provided a list but I dont lnow how to make much sense of it
Perhaps from a bank, on my own.
you don't need title insurance with a coop -- you do with a condo -- $2-3,000 of your closing costs are going to be title searches and insurance -- and recording fees - also if you are borrowing more money than you did for your coop -- you will have higher mortgage tax too
ask what the specific breakdown of your closing costs are -- the lender must provide you with a CD that explains it all
if you have an origination fee, points, high bank fees -- it will show up there
if the escrows are causing it - it will also show up there
have you and/or your attorney read the Condo Prospectus? that should list all the fees associated with your condo at closing -- that will not change no matter which lender you use