Buying or selling a condo just got a lot harder. Major changes from Fannie Mae and Freddie Mac are making it tougher for some buyers to get approved for conventional mortgages.
Here’s what’s changing, stripped of the confusing mortgage jargon:
The 4 Big Changes
- The “Easy Route” Is Going Away: Lenders are taking a much closer look at the financial and physical condition of condo developments. A large down payment doesn’t necessarily eliminate scrutiny of the HOA.
- HOA Reserves Matter More: Lenders are paying closer attention to whether an HOA has adequate reserves to cover future repairs and maintenance. An underfunded HOA can create financing problems.
- Investor Rules Are Relaxing: High concentrations of rental units may no longer automatically create the financing roadblock they once did in certain circumstances.
- Some Insurance Rules Are Becoming More Flexible: Fannie Mae and Freddie Mac have made changes to address today’s increasingly challenging and expensive condo insurance market.
What This Means for Buyers and Sellers
- Expect More Scrutiny: Lenders may spend more time reviewing HOA finances, insurance, reserves, meeting minutes, assessments, and major repairs.
- Expect Possible Delays: Obtaining HOA documents and completing the lender’s project review can add time to a transaction.
- Know Before You Go: Significant deferred maintenance, inadequate reserves, insurance problems, or major unfunded repairs can potentially make conventional financing difficult—or even prevent a particular loan from being approved.
Why Expertise and Market Knowledge Matter Now More Than Ever
Buying or selling a condo isn’t just about the unit anymore. Understanding the financial health, insurance coverage and physical condition of the entire development can be critical to getting a transaction successfully across the finish line.
That’s why knowing what to look for—and looking for it early—matters. I can help cut to the chase by identifying potential HOA issues early—before they become problems in escrow. A good place to start is the HOA’s master insurance policy, six months of meeting minutes, current budget and reserve information, if available.
Thinking of buying or selling? Contact me.
Marco Colantonio | Your Gay Realtor in Palm Springs
760.537.8420
MarcoHomes.com
