Many people are unaware of the significance of complete condo project approvals, regardless of whether they are on the purchasing side, Guest Posting on the selling side, a homeowner looking to refinance, or even a single member of the condominium’s homeowner’s association. In contrast to earlier in this period, when banks did not really care if projects had been “approved,” this aspect can actually make or break any kind of purchase or refinance transaction in today’s more stringent financial environment. In the past, banks did not really care if projects had been “approved.” Before I get started, I’d like to say that this is only a basic overview; in subsequent sections, I will go into greater detail about specific condo project approvals. Terra hill Therefore, how the approval status of condo projects affects existing businesses: For the sake of discussion, let’s say someone bought your condo unit five years ago, when 30 year fixed rates were 6.00%. If you took advantage of today’s lower rates on that same 30-year fixed mortgage loan, which are currently at or near all-time lows of just 4.0%, you would save a significant amount of money each month. Therefore, please wait just a moment because the lending company must attempt to “approve” your condominium project — that is, confirm that all key components of the project adhere to the most recent “Agency” guidelines — before you can get approved for re-financing your existing mortgage loan. Frequently, Fannie Mae is the company in question. This is when things could get tough because in today’s much more difficult lending environment, something that was once deemed “approved” in the previous year might not be approved. In general, you should first check into the status of your building’s project approvals by contacting your homeowner organization before contacting loan providers for refinance rates. Influence of Condo Project Approvals on Dealers: Many people would agree that more people are trying to sell their homes now than ever before when we look at our roads. We see an increasing number of “For Sale” signs everywhere we look. You might be wondering, “How do condo project approvals affect all those property retailers?” The reply is as follows: How will new buyers be able to purchase their home if the initial builder and/or the current homeowner’s organization never bothered to obtain the now-essential condo project approvals? The sad reality is that almost every loan provider will require this before approving your client’s application for a mortgage loan. As a result, condo project approvals are the first thing homeowners check before listing their home for sale. Furthermore, if only a “Conventional” (Fannie Mae) condo project approval is available rather than both Conventional and FHA, all potential customers of the property are immediately cut in half, as approximately 50% of all homeowners currently use FHA financing. If you want to buy, sell, or just re-finance a condo, the first thing you should do is find out if the condo project currently has approvals. If the Home Owner’s Association of the subject property states that they do not have condo project approvals or that the condo project approvals have expired, your next call should be to a reputable loan company or possibly a consultant who can assist you in getting the project approved. There are a select few industry professionals who, provided they acquire business for the mortgage loan, may be able to carry out these tasks for no cost. Before listing your home for sale, obtaining condo project approvals will significantly improve your ability to sell it and help distinguish it from the competition. How Condo Project Approvals Influence Home Buyers: Let’s say you’re looking for the home of your dreams in the center of the action and have narrowed your search down to your preferred location, which is close to the lakefront, live concert venues, and nightlife. I can assure you that the very last thing on your mind is whether or not each of those buildings has received updated condo project approvals, right? Okay, you might be in for a rude shock because buildings that had been approved for condo projects may now be expired or void. Even worse, a number of buildings that were approved for condo projects in, say, 2005 may no longer be able to be approved with the current more stringent requirements. For instance, it appeared that there was a “presale” limit of zero percent on recently constructed buildings, including condo “conversions” from rental properties, as recently as 2007. This indicates that condo project approvals had been granted prior to the acceptance of a single client to purchase a unit, and the builder bore sole responsibility for the project’s success. In today’s lending environment, every traditional loan must pass the Fannie Mae project approval guidelines, which require a 50% presale limit to be met before a single property closing can take place. What?! You may be wondering: Yes, this means that before condo project approvals can be granted, a higher surge with 300 units must have 151 units in agreement, and perhaps a single traditional loan can close there. Therefore, to be fair, there are a few techniques that developers employ to circumvent this, such as “phasing” the project whenever possible. In addition, there are typically a few local financial institutions that are willing to lend their own money (via portfolio products) to perfectly qualified borrowers in order to assist in bridging the gap that exists between the first half of the units selling and the condo project receiving approval at fifty percent sold. However, compared to their Traditional loan alternatives, these portfolio loans typically have terms and conditions that are less favorable, are ARMs (adjustable rate mortgages), and typically include higher interest rates. It is important to note that HUD has increased their efforts to help the condo market by temporarily lowering the presale requirement for the FHA program on new development projects from 51% to 30%. However, I have not yet discovered a lot of widespread positive effects as a direct result of this effort by the Federal Government. In a nutshell, before making an offer on any kind of property, always investigate the condo project approvals of the building. In conclusion, whether you are purchasing, selling, or simply refinancing a condo, check to see that the Fannie Mae and/or FHA approvals for condo projects are still valid. Joe Karns is a marketing and sales chief who is devoted to providing his clients with relevant and useful information. Do you require a free consultation with an actual business professional regarding your condominium project? For more information and expert advice on the FREE condo project, visit Joe Karns at the link below.