Non-warrantable condo financing gives you the added flexibility in working with your condo buyers. If you have a solid project but it does not meet the standard criteria, it may be classified as a non-warrantable condo, which means you can bypass the two largest housing Government Sponsored Entities (GSEs), Fannie Mae and Freddie Mac, while still getting a competitive rate. Secondary marketing lenders are willing to take these loans in exchange for a small price premium. Select mortgage lenders provide this type of condo financing to their brokers.

Non-warrantable condo financing has no pre-sale requirements. The GSEs typically require that 50 to 70 percent of the units are pre-sold before they will approve the financing. They want to ensure that the property is marketable and that the price per unit does not plummet if only a few are sold.

However, it's no longer the chicken or the egg. It used to be that you had to wait until a certain number of units were sold to get financing but, then again, how could you get more units sold if you could not offer financing? With non-warrantable condo financing, there are no pre-sale requirements.

Non-warrantable condo financing allows maximum financing. If the loan does not meet the guidelines of Fannie or Freddie with a 20, 30 or even 50 percent down payment, you may not get the financing for your borrower. However, maximum financing is allowed with non-warrantable condo financing.

Get one-time approval with non-warrantable condo financing. Most lenders will ask you to fill out a condo questionnaire as well as the Homeowners Association for each unit that you want to finance. Save precious time, and ultimately money, as you can get one-time approval with non-warrantable condo financing.

The activity and demand for non-warrantable condo financing is located primarily in vacation, resort and coastal areas with the majority being brand new developments. This financing allows a broker to go to a developer or builder and ensure that he/she can finance a certain number of units with one approval. The developer knows that every loan is not going to be a circus as long as the borrower qualifies.

In addition, brokers can increase their loan volume and grow their business because once they receive the one-time approval, all subsequent loans can go through underwriting quickly. Many lenders will finance up to a certain number of units in the development.

If you are doing only warrantable condo business, then stick with Fannie and Freddie. However, if you have condo properties that are outside their box, then consider the benefits and flexibility of non-warrantable condo financing.

| IRED Home | Search IRED |


© 1995-2009 IRED.Com, Inc
All Rights Reserved