Rise and shine Memphis! Join us around the coffee table on the Real Estate Mortgage Shoppe program. I’m your host, Jo Garner, Mortgage Professional at Evolve Bank and Trust. Our co-host today is having coffee with us via hotline from Chicago. Attorney Ron Cohen, co-owner of Premium Title Group, tell us a little about yourself and what Premium Title Group does for your customers.
This morning we’re talking about whatever you want to discuss regarding your real estate or financing topics. Just give us a call on the air at 901 535-WREC. That number again is 901 535-9732. Condominiums seems to be in the news this week so our general topic is “Good Things To Know About Condominiums, Planned Unit Developments and Co-ops”
Also in the studio with us is Tom King, appraiser and also Shelby County Real Estate Property Tax Appeal Expert with King and Vaughan Consulting. Tom, you’re a regular on this show. But for our new listeners take a minute to introduce yourself and tell us what you do for YOUR customers. ( Jo says, Tom is here today to offer his expertise as an appraiser with over 35 year’s experience. He’s also a certified real estate property appeal expert in Shelby, Fayette and Tipton Counties in Tennessee. With the new Shelby County reappraisals out and the news about raising the overall tax rate, I know YOUR phone is ringing.
We said condos were in the news this week but so were RATES. Mortgage rates slipped down to a record low for 2013. After quite a spike the first of the year, the not-so-good job report and other economic factors along with the situation in Europe has caused mortgage rates to drop a little. Yesterday I was quoting 3.25% zero-point rate on 30 yr fixed FHA loans. You could get lower than that if you paid some points. The conventional 30 yr zero point rate came in around 3.5% The 15 yr fixed zero point rate was around 2.75% to 2.875% .
The question is, will these rates go lower or back up? For the short run my bet is that they will stay the same or go a little lower through Monday or Tuesday barring any other bond breaking news because money managers are buying bonds to balance portfolios for month-end. This doesn’t guarantee lower rates, but it’s a net positive if all other things are equal.
Word to the wise: Whether you are buying a house (or a condo) or refinancing your home, “If the deal works for you today, do it today.”
Ron, how many ways are out there to make money—oh let me count the ways. For those people thinking about refinancing, make the call to have an experienced mortgage officer work up 2 or 3 scenarios just to see how much you can save of your hard-earned cash. 1.By just lowering the rate, you can save hundreds per month which translates to tens of thousands of dollars over time. 2. By lowering the rate AND shortening the term, you can accumulate even MORE savings. 3. Another interesting trend are those experienced investors who pulling lots of cash out of their homes to reinvest in their businesses or other places to make a much higher return than the fixed rate in the 2’s.
The Home Affordable Refinance Program otherwise known as HARP is like the energizer bunny—it May 31-2009, you may be able to refinance to the lower rates without worrying about an appraisal value. This deal is good for your primary residence, your second home or investment properties. If you have an FHA loan, FHA streamline is also a popular because it requires no appraisal. There is the VA streamline loan and also the new pilot program for the Rural Housing/USDA loan. The USDA pilot program also does not require an appraisal.
If you have not talked to a good mortgage officer about specific financing scenario and you’re thinking, “those deals are great for someone else.” Then I am talking to you, please call me directly off the air so I can start working on your refinance scenarios. There have been 2 or 3 customers Susan Belew, my assistant, and I have closed where the customer put off refinancing because they could not conceive of how much money they could save. Once they saw the savings, they were astounded. If that is you, call me off the air at 901 482 0354. That direct number is 901 482 0354. If your driving, just catch me on my blog at www.mortgageloansblog.com
Now entering the bidding wars. Buyers are still experiencing the stiff competition for the houses they want to buy. If you want to win the bidding war, it starts with being prequalified before you start making offers. Call me at 901 482 0354. It only takes a few minutes to get the loan application, the credit report and the automated underwriting program run for the preapproval you need. Susan and I would like VERY much to work with you. Just call us at 901 482 0354 or catch us on the blog. www.mortgageloansblog.com
If you are contemplating renting vs buying, call me. We can do the numbers on that to so you can decide what is best for you. If you want to compare the money down and payments on one house vs a different one, call me. What I can give you for free are close estimates on what kind of money you will need to do one choice compared to another. Then you can make your decision using good numbers. Remember if you’re buying a condominium, you need to know the amount of the association fee. Even though the association fee is not included in your mortgage payment, you’re going to need to pay the condo association for this fee every month. It has to be calculated into your monthly budget.
Some of our realtors out there, chime in and share your advice, especially if you regularly work with condominium sales. Call us on the air at
If our listeners have a real estate or financing question or maybe a legal question, we have the experts around the table to help you find your solution. So give us a call at 901 535 WREC.
Today our general topic is “Good Things To Know About Condominiums, Planned Unit Developments and Co-ops.” Our co-host is Attorney Ron Cohen of Premium Title Group. Ron, why don’t we start with the difference between a regular house and a condo? What is the difference between a house and the condo, the PUD and the co-op?
Questions for Ron Cohen to answer:
1. How does the association operate the management of the condo project?
2. Who is in charge of the repairs?
3. What are some documents you want to review BEFORE putting an offer on a condo for purchase?
4. What if you have pets? How can the bylaws affect you?
Questions for Tom King to answer:
1. What is the difference between appraisal values from a condo versus a regular home?
2.
3.
Questions for Jo Garner to answer:
1. What are some extra restrictions on condo financing compared to buying a regular house?
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. You said earlier that you owned a condominium for over 10 years several years ago. What was your experience and advice you could give to others considering buying a condo.
A. Check out the neighborhood and especially talk to the board members before making an offer. The experience and degree of dedication and cooperation of the board is key to the success of the association as a whole. What has their track record been with handling the money and needed repairs.
B. When you buy insurance, make sure you purchase your own insurance to cover your own liability, your possessions (and in some cases, the wiring and plumbing behind the wall)
C. Read the by laws and covenants and restrictions. I attended a board meeting just to ask the questions like what I would be allowed to do with my property.
My own experience owning a condo many years ago was a very good one. My neighbors were great. As a busy professional I liked that the association cared for the lawn and outside maintenance, termite and pest control and other major projects. Years later I looked back and realized the amount of money I paid in association fees for that place was a bargain because of all the things the maintenance fee covered.
As a loan officer for over 20 years working on loans for customers buying condos, I have seen the good the bad and the ugly. A badly managed association can be a real losing proposition for condo owners. Once the condominium starts getting in bad repair, stop collecting fees and start to accumulate non-occupying investors, watch out.
Real Estate Tip of the Week: Check out the condo association and the condo’s financial books. Read the board meeting minutes to determine what is really going on with the project.
Jo has two announcments: Talk Shoppe offers free education and networking to anyone in the community interested in real estate or business. Talk Shoppe has just moved their location to the classrooms at DeVry University at 6401 Poplar Ave at Poplar and Massey across from International Paper . The events are still every Wednesday 9A to 10A . This Wednesday Sherri Henley of Business Over Coffee will be talking about “The Power of Collaboration.” For more information go to www.TalkShoppe.BIZ.
Next Saturday 9A to 10A here on News Radio AM 600 on the Real Estate Mortgage Shoppe program Tom King, you’re going to be talking about how to appeal your real estate property taxes and we’ll be looking at how a higher tax rate can affect YOU the Shelby County homeowners. For today’s podcast and others, go to our blog www.MortgageLoansBlog.com
Transition Music: “Come Together” by the Beatles; “Knock Three Times” by Tony Orlando and Dawn; “Angel Next Door” by Neil Sedaka.
Information about Jo Garner:
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.
Evolve Notice: Recently, I sent out a matrix with documentation requirements for the various types of reviews for condo and PUD projects. However, one question that has come up and was not addressed in that memo was when do we use limited review, expedited review, full review or PERS for condos. To assist, please see the tables below from the FNMA selling guide to help determine your documentation requirements. The first table is for projects OUTSIDE the state of Florida. The second table applies to projects located in the state of Florida. The same matrix is used by FHLMC for condo project acceptance. There is one exception these tables and the documentation requirements already sent and that is if it is a subject property in certain states with seismic or volcanic hazards. If you have a project in California, Oregon, Washington, Alaska, or Hawaii, and you are using LP, be sure to review the appraisal carefully to see if it is in a designated seismic or volcanic hazard zone. If you have that, please email me and I can assist.
One last, please refer to the FNMA/FHLMC selling guides for a list of ineligible project characteristics (condo-hotel; community interest apartments; projects with shared common areas; etc).
Condo Project Eligibility
The quality of mortgages secured by units in a condo project can be influenced by certain characteristics of the project as a whole. As a result, before Fannie Mae will purchase or securitize mortgages secured by individual units in a condo project, the project must be acceptable. The scope of the guidelines and the specific eligibility criteria are dependent upon whether the condo project reviewed is established or new and are summarized in the following table:
Project Type Eligibility Criteria
Established project • at least 90% of the total units in the project have been conveyed to the unit purchasers;
• the project is 100% complete, including all units and common elements;
• the project is not subject to additional phasing or annexation; and
• control of the homeowners’ association has been turned over to the unit owners.
New project • fewer than 90% of the total units in the project have been conveyed to the unit purchasers;
• the project is not fully completed, such as proposed construction, new construction, or the proposed or incomplete conversion of an existing building to a condo;
• the project is newly converted; or
• the project is subject to additional phasing or annexation.
Two- to four-unit project Additional eligibility requirements apply for two- to four-unit projects:
• no single entity (the same individual, investor group, partnership, or corporation) may own more than one unit within the project;
• all units, common elements, and facilities within the project, including those that are owned by any master association, must be 100% complete;
• all but one unit in the project must have been conveyed to owner-occupant principal residence or second home purchasers; and
• the units in the project must be owned in fee simple or leasehold, and the unit owners must be the sole owners of, and have rights to the use of, the project’s facilities, common elements, and limited common elements.
Florida — Project Review LTV Requirements for Attached Projects (New, Newly Converted and Established)
The following table provides the project review requirements for loans secured by units in condo projects located in Florida. The required project review type depends on the LTV ratio of the mortgage loan.
Florida — Established Condo Projects
PERS Approved Lender Full Review CPM Expedited Review Limited Review
Principal Residence 97% — DU
95% — Non-DU 97% — DU
95% — Non-DU 75%
Second Home 90% 90% 70%
Investor 85% 85% Not Eligible
Florida — New and Newly Converted Condo Projects
PERS Lender Full Review CPM Expedited Review Limited Review
Principal Residence 97% — DU
95% — Non-DU Not Eligible
Second Home 90%
Investor 85%
Article from the Memphis Flyer recently
• With a name like “Garden Walk Condominiums,” one might expect lush greenery and spring flowers. Instead, the 162-unit condo complex in Raleigh is home to boarded windows and broken shutters.
• Only a few families still reside in the dilapidated complex. Tenants have been without water since January, due to its homeowner’s association failing to pay the water bill over a three-month period, amounting to a debt of approximately $30,000.
• Due to the lack of water, Memphis and Shelby County Code Enforcement condemned the complex and ordered its occupants to move out by April 11th. Among those required to leave is 20-year Garden Walk resident Avan Campbell, who is 72.
• “It’s a hurting thing man,” said Campbell, who’s losing his three-bedroom condo. “You’ve put your life savings into it, and then you’ve got to move out. I suffer from post-traumatic stress, so this has been a big toll on me.”
• The condos operate on a single water meter, so the homeowner’s association is responsible for paying the water bill. The association said the water was turned off because many of the occupants haven’t paid their monthly dues, which average between $70 and $100 depending on the square footage of their condo.
• “There’s no way we can pay the bill when no more than 40 people are paying fees for everybody,” said Mary Jones, president of the Garden Walk homeowner’s association. “We have owners over there who’ve [paid] their fees up to a year so they can keep the water on, and they got caught up in this.”
• Since January, many of the remaining occupants at Garden Walk have bought bottled water and caught rainwater in large containers to flush their toilets and bathe.
• “It’s been a real downfall, because I bought [my condo] from my sister and I own it,” resident Cheryle Coren said. “I didn’t think if you owned something that someone could put you out of it. Now, I have to pay rent [since I’ve moved], and [before] I didn’t have to pay anything, because it was mine.”
• The bulk of Garden Walk’s water usage isn’t attributed to its occupants but the property’s leaking water pipes, according to Jerry Collins, president of MLG&W. He said the $30,000 bill was accumulated over a three-month period due to the leaks.
• “There are two options for Garden Walk. The first is to fix the water leaks and then work with us to figure out how this $30,000 back bill might be paid over time,” Collins said. “The second option is that each individual unit could contract with MLG&W to have us tap our water main out in the street, run a line to the edge of the property, and install a meter that would be used for [each] individual condominium.”
• The latter of the two options is estimated to cost around $3,000, not including the fee to have a plumber run the water line from MLG&W’s meter to each individual condo.
• Since the property has been condemned, many occupants have moved and thieves have begun stealing air conditioning units, storm doors, and copper from the condos.
• Collins said MLG&W is implementing an intervention program to identify this type of dilemma early on and avoid similar situations with condo complexes in the future.
• A cost-effective alternative to houses.
• 2) Lifestyle
• Do you like to travel? Or perhaps you’re both working full time and looking after the house and yard is a chore you simply don’t have time for? A Condominium offer a simple ‘lock-up-and-go’ lifestyle. In many cases, your neighbours won’t even know you’re gone,….unless you tell them.
• 3) No Yardwork
• Getting tired of shoveling all winter, and mowing all summer? Is house and yard maintenance weighing you down, or simply getting away from you? In a Condominium, you don’t have to lift a finger. Walks are shoveled, grass is cut, garbage is picked up and halls and common grounds are cleaned and maintained. Just enjoy…
• 4) Security of a Condominium
• A Condominium (especially Highrise Units) offers secure entrances, with security cameras and often even patrolling security companies. As a former police officer I can tell you that break-ins to high-rise condos are rare. While they DO occur, when compared to break-ins to houses, they are statistically insignificant. Piece of mind living in a secure condo.
• 5) Community
• Many condominium owners find that in a condo, their neighbours are enjoying a similar lifestyle, and so they have more in common with these folks. Many condos also offer “common-rooms” where people can get together and talk, or fitness rooms, pools etc etc. This is especially true for the 55+ buildings where all your neighbours are in a similar age group as yourself.
• 6) Lower Operating Costs
• In most condos, especially in the highrise and townhouse variety, the building insurance is already included in the condominium fee. As is the water-bill. And sometimes the heat and hydro as well. Building maintenance is included, so you dont have to worry about replacing a furnace, or the shingles or the windows. And if heat is NOT included, heating a 1000 sq ft apartment style suite is far less expensive than the average 1000 ft bungalow, often even as low as half the cost. (Thats because the units above, below and beside you help insulate you from the elements)
• 7) Benefits of Home Ownership
• With some limitations, condominium owners enjoy many of the same benefits as house owners. They can Live in the condo, Rent it out, Improve it, Give it away, Borrow Money against it and basically treat it the same as a house. The limitations (by-laws) are a two-way street: What some people see as limitations, others see as insurance against having a neighbour do something which would negatively affect YOUR property value. (Ex: Try selling your house after your neighbour has turned his driveway into a junk yard or used-car lot)
• Bo Kauffmann is a consistent top-producing Real Estate Agent with Remax Performance Realty in Winnipeg, MB Canada. He works with Home Sellers and Buyers, and has special knowledge in the field of Condominiums.
• For more real estate related information, visit Winnipeg’s Real Estate Blog at http://bokauffmann.com, or his real estate website at http://winnipeghomefinder.com
• Article Source: http://EzineArticles.com/?expert=Bo_Kauffmann
it sounds like a condo is a great fit for you. The biggest risk in buying real estate is the possibility of a change in the market and the price drops. If you’re planning to stay in the same location for the next 5 years, that risk is VERY low. If you think you might up and move somewhere else next summer, you’d have to sell and could potentially lose money where as if you were renting you could end your lease and walk.
As long as you find a well maintained unit in a complex you are comfortable AND you get a good fixed rate loan I’d say do it.
o
The rules and regulations don’t only affect you, but affect your ability to sell it in the future. Example… they decide no more pets. MAYBE you’ll be grandfathered (again, it’s up to the board they can do what they want), but even if you are, whoever buys your house later won’t be able to have a pet and that is a major saleability problem.
The board can do whatever they want to also. They can make silly rules that can totally mess you up. You never know who you will live next to… they could be total jerks, and on the other side of your wall, and since they own it, nothing can be done to kick them out.
Your condo fees will go up every year. And years when they make a mistake and under-budget, they’ll go up a lot.
My suggestion… stay in the apartment or buy a townhome.
I think it’s a great option, in fact I close on one next week. The HOA might be a concern, but if it’s managed well everything should flow smoothly. Some option would be to look at the minutes of the meetings to see what type of issues come up. Another option would be to get on the board (many are made uop of the owners) and this way you will have a say, or at least a vote, of what happens.
You sound like a perfect condo candidate. The rules and regulations can get to be taxing sometimes, but if you prefer to have someone do most of the maintenance and tell you what you need to do to keep up, you’re good.
My condo requires me to turn in a receipt each year for the following:
A/C inspection
Heater inspection
Dryer vent cleaning
Fireplace flue cleaning
We also have to get permission to hang anything on our patio, need permission to have a satellite dish, need permission and approval on new windows or doors installed, and also have special restrictions as to our flower boxes and other patio decorations.
• says.
• A 2012 study by the Washington Economic Group named the Bluff City as the No. 2 destination for baby boomers looking to retire. Morris also points out there is no income tax in Tennessee, an attractive feature for potential retirees.
• “I can imagine people from around the country, looking for a place to retire with a beautiful view of the river,” Morris says. “You can get a place here for a lot less money than many other cities.”
I really miss doing yardwork, so a condo wasn’t the best choice for me. Though being young, I appreciate having freedom to leave for two weeks and not worry about the yard.
o 5 years ago
o Report Abuse
• by Ed Atun
Member since:
Many good reasons to avoid condos.
Harder to finance than a house.
Harder to sell than a house.
Problems with neighbors.
The HOA will run short of money and ask you to raise your
monthly fee to replaster the pool.
The fees never stop going up.
Never appreciate in value as much as a house does.
Crummy parking.
Trash bin is always full and often smells.
From: Ron A. Cohen [mailto:rac@kusperraucci.com]
Sent: Wednesday, April 24, 2013 11:33 AM
To: Jo Garner
Cc: Dale Jacobson
Subject: Condominium Ownership-Co-Op Ownership Part I
What is it?
A condo is an apartment that is purchased. Ownership and use of the common areas (common elements) in the building are shared with others.
What is a common element?
Every part of the project that is not a unit.
Sounds involved. How can I be sure that I have legal ownership rights.
Buy Title insurance.
How is a condo created?
By a Constitution called a Declaration of Condominium.
Is the Government somehow involved in all of this?
Sort of.
How is the government run?
By the creation of Bylaws which control the internal government of the Association.
Are you bound by any rules if you purchase a condo? For example, I have a friend who has a cow. Her name is Mrs. O. What if she wants to live in the building?
The Rules may place limitations upon pets. The smaller the pet, the less likely the restriction.
Where does the Association get the money to maintain the building?
Through the imposition of maintenance fees or assessments.
Who runs the building?
A governing board called a Board of Directors is elected by the members of the Association. It is all very democratic.
Is this like communal living, like they have in California?
It depends.
Do I have to pay real estate taxes?
The tax assessor assesses each unit along with its share of the common elements.
What if I don’t have enough money to pay cash. Can I get a mortgage?
Yes. a condo is just like any other individual piece of property. Jo Garner will explain this to you.
So a condo apartment is the same as a co-op apartment, right?
No. In a co-op you own shares of a corporation that owns the real estate and you also have a lease for a particular apartment. The lease payments are much like condo assessments except that it also includes the mortgage payment on the whole building.
This is all so confusing. How do I avoid sleepless nights?
Well, you can always count….
Ron A. Cohen
Of Counsel: Kusper & Raucci, Chartered
30 N. LaSalle Street
Suite 3400
Chicago, Illinois 60602
312-332-5000
312-346-1145 (direct)
312-332-4663 (facsimile)