Top 4 Derogatory Credit Events and the waiting periods before you can buy a new home

Have you ever wondered how long you might have to wait after Bankruptcy, Foreclosure, or Short Sale before you can purchase your new home?

Check out the chart and see how long a lender will require you to wait before you can borrow again.

Link to the PDF here:  http://sunshineguru.com/wp-content/uploads/2013/11/Derog-Credit-Chart-Fisher-Darrow.pdf

Interestingly, I recently had a client that was able to purchase a new home just two short years after his short sale.    A wonderful confluence of events allowed him to use his VA eligibility to purchase with nearly zero money down.

He was also able to begin the mortgage process several weeks BEFORE the two-year anniversary date of his short-sale closing, so that he was able to close in a matter of days after the anniversary date passed.

Derogatory Credit Chart

Floridians are paying the 9th highest closing costs in the nation

Closing Costs

Check out the interesting article at BankRate.com that describes how Floridians are paying the 9th highest closing costs in the nation.

Besides lender fees and title charges, don’t forget about your pre-paid taxes and your insurance premiums when you’re calculating how much to save for your down-payment.

Here in South Florida, your insurance premiums are going to be a LOT more than the standard 1% that your lender is going to estimate for insurance on your Good Faith Estimate. Single family homes that don’t have hurricane windows and other storm protection can have insurance premiums as high as $5,000 a year.

Low down-payment options for condos very limited in South Florida

 

It’s a common question during the first interview with buyers who may be seeking a condominium here in South Florida:

“So do you have a 25% – 30% down payment for your purchase?”

It seems to be lost on home sellers during the current frenzy of activity that is fueled by investors and foreign buyers that are flush with cash these days, but the predominant purchasers of condominiums used to be first-time homebuyers that may not have saved up enough cash to put down $30,000, $50,000 or even $100,000 on a new condominium home.

Florida Condo

However, buyers who use FHA financing, however can purchase homes with as little as 3.5% down-payment.

There’s a hitch, though!   You have to find a building that is already FHA, VA or Fannie Mae approved, and here in Fort Lauderdale, there are only a handful!

How does a condo get approved?

It’s a great question, and one we wish more Home Owners Associations would ask about.

It’s not that hard, but does have some cost.    The fees typically run around $2,000 plus the cost of a consultant if you decide to use someone who is versed in the process to guide you through it.

Typically it’s the HOA and the management company that make the decision to get the condominium FHA approved.

FHA will look at a number of factors, and three are of critical importance:

  • the ratio of homeowner’s to investors – no more than 50% of homes can be investment properties.
  • the number of delinquent HOA dues – no more than 15% of homeowners can be delinquent.
  • the amount of money in reserves – typically FHA looks for an HOA to have an amount equal to a year’s worth of assessments in the reserve.
  • mixed uses – your HOA should not have more than 20% of the total space for non-residential uses.

Considering that first time buyers make up the majority of potential condominium purchasers, it makes sense to your association to undertake this effort.

Low down-payment financing is not just for low income resident – in fact it’s far from the reality of what can happen if your property is only attractive to investors!    Investors are typically the kinds of buyer that are looking for the best deal available, and a preponderance of investors buying in your HOA can serve to hold values stagnant or even drive values down!

I’m hoping we all see your condo or HOA on the FHA Approved List one day soon!