Today I want to talk about buying a condominium here in Destin and Fort Walton Beach, FL.
Do you know if you will be financing or are you going to be paying cash? In our market currently, we have about 70% of our buyers for condominiums paying cash.
For those who are not fortunate enough to be able to do that, we have to turn to financing, and that’s okay! But what I need to warn you about is you need to listen to your realtor and you need to work with a local lender.
Why do I need to work with a local lender?
A condominium, let’s say in Nashville or Atlanta, is usually used for full-time, permanent residence and those condo docs rate totally different than our beautiful condominiums on the Gulf of Mexico.
We often have nightly, weekly and monthly rentals, and because of that, that changes the parameters for lending especially from an underwriting point of view.
You never know what the guidelines are going to be because it seemed to be kind of like a moving target. So, we can’t give you a whole list of what qualifies for warrantable and non-warrantable.
Warrantable, what are you talking about?
When we say, “warrantable”, we are talking about those kind of units that will qualify for finance from Fannie Mae and Freddie Mac.
If they don’t qualify for that, you’re going to have to go to a portfolio loan product and your lender is going to be the best source of that information to tell you what’s going to work.
Okay, so if I have to go to a portfolio, what is that going to do for me?
Well, it may mean you’re going to put down a slightly higher down payment. You’re usually looking at 20%, but you may be looking at 25% and your interest rate is going to be slightly higher and you may not have a fixed rate.
It may be a five-year arm, amortized over 30 years, but your lender is the best source of information, and they know which condos in our local market are gonna qualify for which products.
So be smart, do your homework, listen to your realtor and use a local lender.
Real example!
Cynthia and I just lost a deal because we had a buyer who had been financed through a big box mortgage lender. That was great except that they weren’t realizing that this was a Florida Condominium and they couldn’t do it.
And then, when she saw the parameters were, for portfolio product, she wasn’t prepared financially for that. She’s now getting ready for that, and hopefully we’ll be able to find her something in the near future.
So be smart, pay attention, listen to your professionals.
We’re here to help you and we know which condominiums you need to look at and which ones you don’t.
I’ll see you next week for part two.
