Call : Because of the resort nature of Park City getting a loan for a condo can be tricky. There are basically three types of condos; Warrantable (can get a conventional loan), Non-Warrantable (does not qualify for conventional loan), and Condo-Hotel (just like it sounds it is part of a hotel).
When a property is identified for purchase the first step is to determine which category the property falls into. This is done by researching the legal description (is it a condo, townhome, planned unit development). In Park City it may look like a condo from the outside but it is legally a townhome or planned unit development, so different guidelines apply. The condo project is looked up on the Fannie Mae and FHA websites to see if it is approved by either entity. Currently there are no approved condos in Park City. The project is checked to see if it is on any lenders Do Not Lend List. Next I Google the property and look for any association with nightly rentals, hotels, onsite check in desks, and hotel type amenities. This gives me an idea what some of the challenges this property will have.
Next, the HOA fills out a condo questionnaire. There is a limited review and a full review.
Limited review: primary home or second home, 80% or less loan to value, established condo projects, approval done by underwriter, no occupancy ratio requirements, no more than 15% owners late on HOA dues.
Full review: primary, second home and investment, 80% or more loan to value, 51% of project owner occupied or second home, 10% of budget for reserves, no single entity can own more than 10% of project, established and new projects, no more than 15% owners late on HOA dues, and approval done by condo department at a fee.
Brief list of items that make a condo non warrantable; managed as a hotel, hotel conversions, hotel or motel in name, onsite registration AND nightly rental, restrict occupancy, timeshares, co-ops, houseboats, 20% + of space is not residential, single entity owns more than 10% of project, HOA in pending litigation.
If a condo is warrantable, the buyer can get a conventional (normal) loan, fixed rate or adjustable rate at current market rates. If the condo is non-warrantable or a condo-hotel the loan will have to go to a portfolio investor. They typically requires 30% down and only have adjustable rates available (3,5, and 7 years). The rates are usually 1%+ higher than a conforming loan.
Contact me for more information or specific questions.
Amy Sharpless
Senior Loan Consultant (Sharpless/Hoyt Team)
435-645-3923 Office 435-640-1878 Mobile amy.sharpless@academy.cc
NMLS ID: 294849 License #: 5460939 Company NMLS #: 3113 State #: 5491140
Leave a Reply
You must be logged in to post a comment.