FHA Loans: No to Condos
It was not many years ago when a client using an FHA loan to buy a home was rare. Over the past few years, the FHA has been the go-to mortgage option for low to moderate income buyers.
For young first time buyers and buyers who don't have significant cash for a down payment the FHA has been a great option. Among the three major federal lending intermediaries including Fannie Mae and Freddie Mac, the FHA is the most flexible on credit issues. It is also lenient on debt ratios and allows down payments as small as 3.5 percent.
The issue with Condos is not the buyer's ability to qualify for an FHA loan, it's that thousands of condo developments are ineligible for FHA lending and the number of prohibited projects is growing. As a result of federal policy changes and decisions by condo associations, thousands of complexes have become prohibited for the FHA.
Since the FHA tightened the rules for condo the number of developments approved for financing has dropped by more than half. The number of approved developments is now just over 10,000 while the total number of condo developments is approximately 144,000. There are very few approved condo complexes in the Sacramento area and is becoming a problem for owners as well as buyers.
The FHA will insure mortgages only on units in condo developments which have passed a certification process that examines budgets, reserves, insurance coverage, percentage of renters, and condo fee delinquencies. According to the FHA this certification process reduces taxpayer exposure to future losses by eliminating poorly managed and fiscally week developments. Condo associations complain the evaluation criteria are overly strict and the process of certification is too expensive.
Various state associations of Realtors are now working directly with condo boards and asking them to re-think their decisions not to pursue FHA certifications and to do this for their owners benefit. The program stresses keeping the condo values at their highest, increasing the pool of potential buyers and helping owner use their equity.
FHA certification may be complicated and cost associations money but could be well worth it for current residents and future buyers.
If you have any questions about buying or selling a condo or using FHA loans please feel free to contact me at the MagnumOne Realty office in Roseville (916-899-6571) or send an email to JulieJ@Jalone.com.
Julie Jalone, wife and mother living in Rocklin, is an experienced professional Realtor ® serving
the Greater Sacramento area including Placer, El Dorado, Yolo and Yuba counties.
Julie may be reached online at www.jalone.com or by calling (916) 276-6883
Check out her daily web blog: Keep it Real in Sacramento
Placer County News HeadlinesAuburn Woman Attacked Inside HomePlacer County sheriff's detectives are looking for a man who attacked a woman at her north Auburn home early this morning.
Western Nationals Softball Tournament in Roseville and LincolnASA Softball is bringing the Western Nationals for the Girls B 10U & 12U divisions to the Placer Valley Area. The event is six days long, taking place from July 28-August 3.
Tahoe Public Projects Garner AttentionTahoe Transportation District has been recognized nationally and by the state of Nevada for its positive impacts, collaborative initiatives, environmental enhancement, and service to the community's
Rocklin National Night Out Events August 5thEach community member is invited to join their neighborhood watch group and the Rocklin Police Department for National Night Out on Tuesday, August 5, 2014.
Recovery Plan for California Salmon and SteelheadNOAA Fisheries and the California Department of Fish and Wildlife (CDFW) jointly released two plans to restore populations of salmon and steelhead in California's Central Valley
Rocklin Crime Report Digest Update (7.22.14)The Rocklin Police Department's crime report digest update for the period of July 15, 2014 - July 21, 2014.
Noodles & Company Opening Roseville and Rocklin LocationsNoodles & Company is opening two new locations in Roseville and Rocklin over the next two weeks.
Raley's Wins Telly AwardsRaley's has been awarded an astounding total of 24 Telly Awards in Commercial and Online Video categories
Summer Gas Prices Continue DroppingAverage retail gasoline prices in Sacramento have fallen 4.4 cents per gallon in the past week, averaging $3.94/g yesterday, according to GasBuddy's daily survey of 720 gas outlets
Mitsubishi Outlander Sport Offers Solid ValueAlthough the 2014 Mitsubishi Outlander went through a much-needed redesign this year, note that the Sport model only made minor changes.
Family of 5: Saving Big on TV, Internet and PhonesRecently, we decided to reevaluate our Comcast and AT&T services due to the combination of poor customer service and pricing issues.
57 Year Old Sentenced in Mailbox Destruction CaseRichard Lee Gray, 57, of Foresthill, was recently sentenced to one year in prison for destroying U.S. Post Office letter boxes, being a felon in possession of ammunition, and