The Update That Will Shape a Lot of Condo Deals Starting in August

If you are buying or selling a condo there is a guideline update taking effect around August 3rd that is going to matter for how deals get structured and which projects can move forward with conventional financing. Getting ahead of it now is considerably easier than discovering it mid-transaction after you are already under contract.

What Is Actually Changing

HOA reserve funding requirements are moving up to approximately 15 percent. Some project reviews that previously required additional documentation are being streamlined or eliminated. And lenders will be taking a closer look at insurance coverage and building maintenance records as part of the project eligibility evaluation.

The underlying message is straightforward. A condo project's financial health and physical upkeep now matter more than ever in the financing evaluation. A building with deferred maintenance, inadequate reserves, or insurance gaps is going to face more scrutiny under the new guidelines than it would have previously and some projects that qualified before may not qualify under the updated requirements.

Why Bringing Your Loan Officer in Early Is the Smart Move

As Geoff Ricker explains the people who win in this new environment are the ones who check the condo first before going under contract rather than finding out after the fact that the project has a financing issue.

The process is simple. Send Geoff the condo name or address before you go under contract and he will confirm whether that specific project qualifies for conventional financing under the updated guidelines. If it meets the requirements the transaction moves forward with full confidence. If it falls outside them the conversation shifts to non-warrantable condo financing which provides a clear alternative path to the home you want rather than a dead end.

Non-warrantable condo products serve buyers purchasing in projects that do not meet agency guidelines for a variety of reasons. Having that option already in place as a ready alternative means no deal dies simply because the project does not fit the conventional framework.

What This Means for Sellers

For sellers the new guidelines create an opportunity to get ahead of the conversation rather than being caught off guard when a buyer's lender raises a project concern after an offer is accepted.

Knowing that your building qualifies for conventional financing before you list is a meaningful advantage. It removes a potential obstacle from the transaction before it has any chance to create uncertainty and it allows you and your agent to market the property with confidence rather than fielding financing questions mid-deal.

If the building has reserve or maintenance issues that might create friction under the new guidelines knowing that before listing gives you time to either address the issue or position the property appropriately for buyers who are working with lenders who offer non-warrantable products.

The Simple Step That Protects Every Condo Deal

Check the condo first. It is a simple step that takes very little time and eliminates a category of risk that can derail a transaction that otherwise makes complete sense for buyer and seller alike.

Reach out to Geoff Ricker at Bay Capital Mortgage before your next condo deal and let him confirm project eligibility upfront. Call or text 443-532-1620 to get started.

Sources

FannieMae.com
FreddieMac.com
MortgageNewsDaily.com
NAR.realtor
ConsumerFinancialProtectionBureau.gov