This has been a hot topic lately in Las Vegas. Due to the low prices, we have tons of buyers who are dying to buy a condo. The lure of $25,000, $35,000 even $50,000 condos is unbelievable catnip.
Can you imagine having a house payment of only $275 a month (of course that doesn't include taxes, insurance or HOA fees)? But my car payment is more than that.
So buyers are calling me, emailing me, telling me they've been prequalified and want to buy. Then I have to drop "The Bomb!" I'm so sorry, but even though you're prequalified, your lender will not loan on a condo. And then you get the expected response ………. "But Why?"
A few months back, when the bottom dropped out on the lenders, all lenders decided to follow FHA/VA guidelines which now limit the condo communities they'll loan on. Those guidelines say that the community must be at least 80% owner occupied. That means that if there are lots of vacant units that have become bank owned, or too many units are owned by investors and rented out (or a combination of both of those), the property does not qualify for financing. In addition, they won't finance a property that has more than 20% of the owners who are 30 days or more delinquent on their monthly HOA dues. Lastly, if there is any pending litigation, they will also usually refuse to finance.
Now there is a website that lists FHA qualified communities, however, when the due diligence is performed on the community, there are truly only a handful of properties that may qualify. So the standard response is "Sorry, you will have to pay cash."
The good news is this does not apply to townhouses (if they are truly registered with the county assessor as a townhouse) or single family homes. But for those of you who were hoping for a $275 monthly mortgage, I'm afraid you're out of luck … at least for a while.
Heather Peck
Rosen & Company West
702-595-7380
www.HeatherSellsVegas.com
