Condos, condos, condos. I don’t know about you but financing condos seems to have become a hot topic lately. Specifically, if it is non-warrantable…but no one likes labels, right? What is a non-warrantable condo anyway? Does one simple label of “non-warrantable” fit all situations? Let’s dive into this so you don’t miss opportunities…
“Non-Warrantable”
Let’s first define what a non-warrantable condo is. A Non-warrantable condo is a condo project that can not be financed under traditional Fannie Mae (FNMA) or Freddie Mac (FHLMC) guidelines. We need to understand what the guidelines are to better determine if a condo is non-warrantable.
Limited vs Full Condo Review
First, we need to understand the difference between a Limited Condo Review and a Full Condo Review. Limited Reviews are exactly that…limited! This means that the lender does not need to investigate the condo project as fully as we would on a full review. This means that some things that you may think make a condo project non-warrantable may not matter if we can do a Limited Review. When can you do a Limited Review?
Limited Condo Review
Limited Reviews can be done when the buyer purchasing the condo is an owner occupant with 10% or more down payment OR a second home (vacation home) buyer with 25% or more down payment. You may have noticed investors are not eligible for a Limited Review. What does a Limited Review do for you?
The biggest benefit of a Limited Review is the omission of owner occupancy levels within the condo project. In other words, the lender does not care what percentage of investors own units within the condo project for Limited Reviews. Whether you are representing a buyer or seller of a condo this is an important distinction. As a listing agent you would not want to label the condo as “non-warrantable” due only to investor-concentration exceeding 50%. As a buyer’s agent you will want to inquire as to the reason the project is non-warrantable as the listing agent may not know what you now know. This may give you the ability to help your buyer purchase a condo others may be avoiding due to its “non-warrantable” status.
Cheat Sheet
What truly makes a condo project non-warrantable? Wouldn’t it be nice to have a handy guide to reference…oh wait!! The Wynn Team created one for you:
Download the Non-Warrantable Condo Wynning Sheet
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