It’s a beautiful day in Memphis today! You’re on the Real Estate Mortgage Shoppe program. I’m your host, Jo Garner, mortgage professional with Evolve Bank and Trust. Today we’re talking about “Condos, Planned Unit Developments, Co-ops: Legal Loopholes and Your Money.” And, it just happens that we’re having coffee this morning with two Condo-PUD experts—Attorney Ron Cohen of Premium Title Group and Pat Goldstein, realtor with Crye-Leike.
Attorney Ron Cohen—always glad to have you on the show Pat Goldstein, you’ve been realtor in Memphis for over 30 years? A long time with a LOT of experience. To our listeners –this is YOUR invitation to join the conversation today Whatever your real estate topic—you may want to talk about your home, your investment property, your financing, your credit or real estate legal issues. We want you to call us on the air at 901 535 WREC. That number again is 901 535 9732.
Ron, you and Pat have been extremely busy over the last few weeks with the home buying frenzy going on.
(JO STARTS HER PART) Yes, the rates this week reminded me of wild stories I’ve heard about teenage drag racing in the 70’s off Summer Ave in Memphis. Someone asked Bernanke, ourFed chairman, if he could guarantee that he would continue the current bond buying campaign to keeps rates down. When he said, “Depending on the data…” the mortgage prices shot up about 100 basis points within 23 seconds. You could almost hear the investors’ engines revving in the background and then the pedal hitting the metal.
Over the last few weeks we have gone from quoting 3.25% on a 30 yr fixed conventional loan to 3.75% with no points. The FHA rates were around 3.25% to 3.5% on their 30 yr program and the 15 yr conventional fixed rates came in around 2.75% to 3%.
If you want to purchase a home or refinance one, you’ve still got bragging rights on the money you can save if you do it before its too late. Here’s my word to the wise: “If the deal works for you today, do it today.”
The special HARP program is great for people who have conventional loans backed by Fannie Mae or Freddie Mac on or before May 31, 2009. No appraisal value needed. You can refinance a primary residence, 2nd home or even an investment property—and that includes your condo if you have one. If you have a USDA Rural Housing loan, we can get your rate down without the cost or trouble of an appraisal and we can roll in the closing costs if you want.
If you have an FHA loan, you can refinance with no appraisal at all. We have callers who say other lenders have told them they have to come up with a lot of money to refinance like this since you can’t roll costs into the loan. Susan and I have ways we can work around this to get you a lower rate on your FHA loan with very little or no money invested on your part. My knowledgable assistant, Susan Belew and I would like very much to work with you. Just call us directly at 901 482 0354. That number to reach us directly is 901 482 0354 or catch us on our blog www.mortgageloansblog.com
If you are purchasing a home, in many cases its cheaper to buy than rent in many areas of the country, especially in the Memphis area. If your children are headed to college, we need to talk. If you are renting but plan on staying in the city where you are for a while, we need to talk. We have down payment assistance for our customers who qualify. We can do the more sophisticated combination loan scenarios for those of you who want to pay enough down to avoid paying mortgage insurance but don’t want to use their own money to do it.
For real estate investors and self employed borrowers—keeping your own money in your pocket and working for you can make a significant difference in your profit. Send me all pages of your last 2 years tax returns. They say Susan and I can find income to use in those returns like pulling blood out of a turnip. Let me see what I can do for you. Call me directly at 901 482 0354.
Today, we have Attorney Ron Cohen of Premium Title Group and Pat Goldstein , realtor from Crye-Leike, around the coffee table. We want to help you and others find solutions. Ron Cohen, you’re a season attorney and you guys have done a great job getting my customers loans closed over the years. I know we’ve worked on some condos and several Planned Unit Developments. What is the main difference between owning a condo and owning a free standing home?
Questions for Attorney Ron Cohen to answer:
1. What is the difference between a condo and a PUD?
2. What specific paperwork do you advise your clients to review before buying a condominium or Planned Unit Development?
3. What are some of the common restrictions you see in condo bylaws and association convenants and restrictions? What is good and bad about these?
4. What remedies do condo associations have to collect past due association fees from condo owners? What remedies to condo associations have to curb negative or illegal activity from other owners that stand-alone property owners do not have?
5. What exactly does the condominium owner actually own and control?
Questions for Pat Goldstein to answer:
1. What type customer do you normally see who is in the market to purchase a condo?
2. In your opinion what are the greatest advantages to buying a condo vs a free standing home?
3. What experiences to you remember most, good and bad, about condo ownership?
4. When you are working with a condo or Planned Unit Development buyer, what is the most common advice you give them?
Questions for Jo Garner to answer:
1. What kind of financing is available for purchasing condominiums?
Since the value and saleability of a condominium is largely determined by the associations management and the other owners in the project, mortgage companies usually require a limited review or full review of the condo project before considering it as collateral.
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A. What percentage of the condo project are owner occupied and what percentage are investors? It’s a good thing when the condominium project has 51% or more owner occupants. When you see the condo units start converting to rental units, the outlook for the project as a whole is not usually good. Owner occupants tend to take better care of their units and the association as a whole.
B. It is not good to have one person own more than ten percent of the units. There are some exceptions to this rule though.
C. On the more detailed reviews mortgage companies will ask to see the books of an association to determine if the collection rate is acceptable on the fees. They will check for large member assessments. Mortgage companies have requirements for liability insurance to cover the association and members.
If the condominium you want to buy is a new one, the mortgage company usually requires a minimum number of the units in the project be presold and on new projects a full, detailed review is usually required.
2. What specific factors do lenders consider when determining if they will lend on a particular condominium unit?
3. Do you know where to get financing for condotels? Google “financing for condotels” and you will find private lenders who do lending on these. Their terms are not usually as good as a traditional Fannie or Freddie, but most Fannie and Freddie lenders cannot lend on a condotel.
4. What different lending guidelines are used when the condo is being purchased as a 2nd home or investment property as opposed to a primary residence? If the borrower is buying a condo unit as an investment, the lender usually wants to get a lot more details from the association representative as well as a full copy of the association’s budget and in-force master insurance policy. On a primary residence the lender can usually do a quick spot approval for the unit being purchased. However, the lender will ask the condo association president to complete a short form. Here are some of the questions on the short form:
A. What percentage of the units are owner occupied? It is not good if over half of the unit owners are investors using the properties for rental units.
B. Does one person own over 10% of the units? The answer should be no unless then are 10 or less units in the project.
C. How well is the association collecting the association fees. You want LESS than 15% of the units over 30 days late on paying the association fee.
D. What percentage of the condo project is used for commercial purposes? Less than 20% is the right answer and that is only if it is like downtown Memphis where it is normal to have a commercial business using a small portion of the project for other than residential.
E. If the condominium project or phase is new, then the lender will want to determine that 90% or more are sold or presolded before reviewing their documents for approval.
Real Estate Tip of the Week: Jo ‘s tip of the of week: Know Thy Neighbor; Know Thy Leaders and their By-Laws. Before purchasing a condominium or even a planned unit development, visit the location at different times to see who your neighbors will be. Talk to them . Most importantly, talk with the people who sit on the association board of directors. Do they have the expertise to successfully manage the condominiums and therefore YOUR investment? What are their plans for the future of the condominiums? Are there any expense items coming up that may require extra money from you? Will you be able to live happily within this project?
Jo’s two announcements: Talk Shoppe offers free networking and education to anyone interested in real estate or business. This Wednesday at DeVry University 6401 Poplar Ave in Memphis 9A-10A you have an opportunity to participate in the Mastermind Principle: based on the book Think and Grow Rich by Napoleon Hill. Come prepared to share and receive business ideas, resources and referrals with business people in a small group. For more information about Talk Shoppe go to www.TalkShoppe.BIZ For more information about DeVry University’s upcoming Crash A Class week, contact them at 901-537-2560
888-563-3879
Next Saturday morning right here on the Real Estate Mortgage Shoppe program , we going to be talking about real estate, financing and more.
Transitional Music : “I’ll Be There For You” by the Rembrants; “Crackerbox Palace” by George Harrison; “House” by Elton John
Attorney Ron Cohen Premium Title Group
Of Counsel: Kusper & Raucci, Chartered
33 N. Dearborn Street
Suite 1530
Chicago, Illinois 60602
312-332-5000
312-346-1145 (direct)
312-332-4663 (facsimile)
Pat Goldstein, Realtor with Crye Leike in Memphis 901 606 2000
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years in Memphis, TN. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. She hosts the Real Estate Mortgage Shoppe program on News Radio AM 600 WREC in Memphis and on IHEART radio 9A to 10A CST every Saturday.
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.