May 31, 2019 at 1:23pm | Katy Ryan
Today Amy Prater joins me to discuss how getting a condo loan is different than getting a residential home loan.

Today Amy Prater of Bank Midwest joins me to discuss condo loans. The condo market is on fire right now, but getting a condo loan is different than getting a single-family residential home loan.

How is it different? According to Amy, part of the paperwork required by lenders includes a questionnaire designed specifically for Fannie Mae and Freddie Mac, and seven of its questions will determine whether the condo you want to buy is a warrantable property or not ( “warrantable” meaning something they’ll insure once it’s been picked up from your long-term servicing company).

Of all the condo loans Amy does on a yearly basis, she estimates that 95% of them end up being non-warrantable for one reason or another. One of the disqualifiers, for instance, is when the developer still owns at least 20% of the units in the condominium. Another is if they don’t have 10% of their budget held back in reserve.

If a property comes back as non-warrantable, your lender can’t transfer it out for servicing to a third party because it can’t be insured by Fannie Mae or Freddie Mac. What they’ll do instead is portfolio the loan.

If a Realtor has never handled a condo purchase, they might not know about this questionnaire or be aware that Fannie Mae and Freddie Mac might not be able to insure the condo in question, so it helps to work with one who’s experienced in this area.

Stay tuned for part two of our conversation in the coming weeks. If you have any questions for Amy in the meantime or you’re looking to secure a condo loan, you can reach her by phone at (913) 324-6103.

As always, if you have any other real estate needs I can take care of, just give me a call or send me an email. I’d love to help you.


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