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Message
Condo Finance Advice
Posted on 10/23/12 at 9:41 pm
Posted on 10/23/12 at 9:41 pm
long story short I have a condo that is being used as my primary residence. it was purchased by my parents while i was in college with the promise i would take it off their hands at some point in the future. Now to give you some background my plan is to live here for no more than 2 more years.. less if possible so i can take adv of low rates and get into a house... At that point i would sale the condo for whatever i can get and call it a learning lesson in bad investments or rent it out and hope at some point i can get something for it...
as most of you know condo financing is very difficult as the majority of condo developments are not eligible for FHA loans... thus making it difficult for people to qualify to take them down. I spoke with a banker today about this issue and he indicated that in the past he has done in house loans on deals like this.. (we are talking about a very small amount of money like under 6 figures.)
essentially what we talked about was a purchase price of somewhere in the neighborhood of $50-60k a rate fixed somewhere in the low 4%'s for 5 years am'd out no more than 15 years. Now here is the kicker the condo "value" is in theory worth more than the loan amount... so what I gathered from him is I would not be required to put anything down and he would basically just carry the equity over from my parents... also he said there would be no bank fees the only closing costs would be the legal work to transfer title... so $1K or so i would assume.
Now i am not really worried about how short term of a loan this will be since I have won't have $ tied up in closing costs...
now I understand the big huge problem with this plan is who knows what rates will do in 5 year but i think its fair to assume they will go up... hopefully in 5 years I either have this place paid off or no longer have my name on the title..
another idea i have considered is to have my dad owner finance it for me... but honestly its not worth the headache in my opinion when we can get 4% money from the bank....
thoughts, hate words, kind words, are all appreciated.
as most of you know condo financing is very difficult as the majority of condo developments are not eligible for FHA loans... thus making it difficult for people to qualify to take them down. I spoke with a banker today about this issue and he indicated that in the past he has done in house loans on deals like this.. (we are talking about a very small amount of money like under 6 figures.)
essentially what we talked about was a purchase price of somewhere in the neighborhood of $50-60k a rate fixed somewhere in the low 4%'s for 5 years am'd out no more than 15 years. Now here is the kicker the condo "value" is in theory worth more than the loan amount... so what I gathered from him is I would not be required to put anything down and he would basically just carry the equity over from my parents... also he said there would be no bank fees the only closing costs would be the legal work to transfer title... so $1K or so i would assume.
Now i am not really worried about how short term of a loan this will be since I have won't have $ tied up in closing costs...
now I understand the big huge problem with this plan is who knows what rates will do in 5 year but i think its fair to assume they will go up... hopefully in 5 years I either have this place paid off or no longer have my name on the title..
another idea i have considered is to have my dad owner finance it for me... but honestly its not worth the headache in my opinion when we can get 4% money from the bank....
thoughts, hate words, kind words, are all appreciated.
2
Posted on 10/23/12 at 10:56 pm to bryso
i bought a condo in 07 and it's lost about 20% in value. it was my first "home" and times were good back then and i didn't have to put any cash down, as there were a ton of programs available for first time buyers...
the rate i got at the time was 6.3%... i could obviously save a killing with a refi, but i've run into the same FHA problem. And what's brutal is that Freddie Mac owns my current mortgage.. They just won't take it again...
i don't know what the hell to do.. just sucks.
only advice i would give anyone is to never ever ever buy a condo. i could write a dissertation on the problems i've had..
the rate i got at the time was 6.3%... i could obviously save a killing with a refi, but i've run into the same FHA problem. And what's brutal is that Freddie Mac owns my current mortgage.. They just won't take it again...
i don't know what the hell to do.. just sucks.
only advice i would give anyone is to never ever ever buy a condo. i could write a dissertation on the problems i've had..
Posted on 10/23/12 at 11:07 pm to bryso
tl;dr
Posted on 10/24/12 at 12:19 am to Paul Allen
Sorry.
tl:dr
Have to buy a condo from my dad because I promised I would. Can't get FHA loan. Talked to banker can finace roughly 100% low 4% fixed for 5 15 year am. Looking for input or other ideas
tl:dr
Have to buy a condo from my dad because I promised I would. Can't get FHA loan. Talked to banker can finace roughly 100% low 4% fixed for 5 15 year am. Looking for input or other ideas
Posted on 10/24/12 at 12:21 am to SlidellBammer
I agree to never buy one. It's a terrible idea. 90% of the time
Posted on 10/24/12 at 9:46 am to bryso
Have you tried to sell it? What is the condo market like where you live. The only thing about the short term interest rate is you don't know if you will be able to sell it and we don't know what rates are going to do. Have to talked to a Mortgage Lender about your options? You may be able to get your Dad to sell the property to you and give you a gift of equity and do a conventional loan. Do you have good credit? FICO 700 or higher?
Posted on 10/24/12 at 3:08 pm to CajunTigerBabe
No way you're getting a convential loan on it... Haven't tried to sale it because Its just not a good time. The HOA has some work to do to get it looking better on the outside. Plus I would have to find a place To live in the meantime... Don't want to move twice.
I know rates could go up but we are talking a very small amount of money so the note wouldn't kill me even if they went up to 20%. But the plan is to pay the balloon when it comes due in 5 years.... Then either sale, rent , or owner finance. So a rate increase shouldn't matter
I know rates could go up but we are talking a very small amount of money so the note wouldn't kill me even if they went up to 20%. But the plan is to pay the balloon when it comes due in 5 years.... Then either sale, rent , or owner finance. So a rate increase shouldn't matter
Posted on 10/24/12 at 3:12 pm to bryso
Try a local homestead. I closed on a foreclosed condo a month or so ago. I had to try a few different lenders. I eventually got a 30 year at 3.9% conventional loan. National banks/banks that spin loans off won't touch you but credit unions and homesteads will do it.
Posted on 10/24/12 at 3:32 pm to bryso
Ummm, we do conventional loans on Condos all the time with as low as 10% down. Have you tried? Is your credit good enough.I wouldn't rule it out unless you have bad credit. What kind of loan does your Dad have on it now?
Posted on 10/24/12 at 4:33 pm to CajunTigerBabe
Cajun Tiger, what lender are you with? I am currently owner financing six condos, and they will all need to refinance in the next year or two to pay me off. I would like to send them your way.
Posted on 10/24/12 at 4:57 pm to CajunTigerBabe
quote:
we do conventional loans on Condos all the time with as low as 10% down
are they FHA approved developments?
quote:
Is your credit good enough
no idea... the only research i have done into my credit score is a transunion free trial... it gave me a number of 880 no idea how that relates to a real credit score.
Posted on 10/24/12 at 5:25 pm to bryso
A condo project doesn't have to be FHA approved to get a conventional loan. Call a mortgage lender and educate yourself before you screw yourself. You need to know what your FICO score is too. FICO score and generic credit score are not the same thing.
Posted on 10/24/12 at 5:57 pm to CajunTigerBabe
I actually called a mtg broker that some people in my office have worked with and told her my situation she(along with everyone else I have talked to) said a bank isn't going to touch it... So I hope what you're saying is true
I have a call into campus fed. Can you suggest anyone else
I have a call into campus fed. Can you suggest anyone else
Posted on 10/24/12 at 8:39 pm to bryso
Where are you located?
Posted on 10/24/12 at 8:49 pm to CajunTigerBabe
Baton rouge
Eta:
I plan to buy a house in 12 months what's this condo loan going to do to my ability to go out and get another loan.
Eta:
I plan to buy a house in 12 months what's this condo loan going to do to my ability to go out and get another loan.
This post was edited on 10/24/12 at 9:53 pm
Posted on 10/25/12 at 7:06 am to bryso
why dont you just rent it out?
Posted on 10/25/12 at 8:03 am to bryso
quote:
I plan to buy a house in 12 months what's this condo loan going to do to my ability to go out and get another loan.
It's going to add debt. Will your debt to income ratio support two mortgage payments because you aren't going to have a rental history on the condo.
Posted on 10/25/12 at 8:20 am to bryso
bryson, let me know if you heard from someone at Campus. rhinotiger50@gmail.com. I may have a cnatact there to get your call returned a little quicker.
Posted on 10/25/12 at 8:35 am to Pilot Tiger
quote:
why dont you just rent it out?
I will at some point but need the roof for now
Posted on 10/25/12 at 8:36 am to VABuckeye
quote:
It's going to add debt. Will your debt to income ratio support two mortgage payments because you aren't going to have a rental history on the condo.
I'm talking about small amounts of money so hopefully it will....
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