CONDO-FinancingIssues-MINIUMS

Condos, especially condos purchased as second homes or investment properties in a resort area, continue to drive buyers, sellers, mortgage lenders, and Realtor's crazy.

One of my referral agents had a client call me about 4 weeks ago to finance a condo in Bear Trap Duneshere at the beach in Delaware. Now, I do loans in Bear Trap all the time and have already fought the battle with my lender and Fannie/Freddie that this is NOT a Resort Condo or a Condotel. And, I understand that if you put less than 25% down on a condo, there is a 3/4 point add-on to the price of the mortgage (assuming it's sold to Fannie or Freddie).

So what happened you ask. The borrower consulted an out of state mortgage broker (referred by a relative) who told her, no problem, I can give you the same rate with 20% down AND "no issue getting a condo approved."

Fast forward, with a "locked" rate in hand, the borrower moved ahead with the out of state broker thinking she'd gotten a GREAT deal. Problem is, I got a phone call late yesterday that the broker's lender can't get the condo approved "by Fannie Mae" and therefore they can't close the purchase loan on Tuesday - can I just take her broker's loan file and close the loan myself keeping the great rate? Unfortunately, I can't. We have to order a new appraisal, submit a new mortgage application, and lock today's rate. I can probably close in 2 weeks if all goes well, but you know, the pipeline is pretty full in our processing shop right now with first time buyers trying to close by November 30th.

Lesson learned? If you are buying, selling, listing or showing a condo in a resort area - know the issues. Use an experienced lender that does condo financing regularly. Then you won't need to worry about a delayed settlement, lost rate locks, and other financial penalties and wasted money.