Need advice on how to Refinance a Non-Warrantable Condo

4 Replies

Hello Everyone,

I am considering purchasing a cash-flowing Condo by seller financing. I know the seller , being a family member, will be okay with financing it for a few years but will want a lump sum payment in the next few years. My plan is to try to refinance in a year or two. Will a Portfolio Lender be the only one that can help me? How difficult is it to refi a condo as I have never done so before. What sort of LTV can I expect for refinancing a non-warrantable condo?

I am interested in the property because it has a long-term tenant and will cashflow easily $200/month.  Thank you.

Mel

Lenders in my state do non-warrantable condos on primary residences up to 75%. I don't know any that would do an investment condo non-warrantable. You might want to go to a few brokers and see what's out there in your local bank market. That's a pretty risky product in a risky state.

Just curious- why is it unwarrantable? If there's a risk factor (low reserves, pending litigation, deliquent fees, etc) that's causing it, have you investigated? The reason it might be releveant is that if the HOA is unhealthy or is en route, that $200/month cash-flow could go the other way pretty quickly. Might not be a good deal for you long-term.

Thank you for the response Ryan Gillette!

I believe it is considered unwarrantable because it is less than 50% owner occupied.  A solid amount of people in the condominium are renters.  Perhaps my definition of unwarrantable is incorrect (which could be because I am a newbie, haha), but is a property considered unwarrantable if it is not at least 50% owner occupied?

I understand what you are saying in regards to this not being a good long-term deal for me.  I was just excited at a seller financed deal coming along my way.  As you suggested, I'm going to reach out to some local lenders and get an idea about being able to refinance before I move forward.  I may end up walking away from this deal if refinancing is not an option for me in the future.  Thanks again!

@Christian Nachtrieb I saw you posted on this thread from 3 years ago so thought I had better give some information just in case.  Non-Warrantable condos are pretty common and finding a lender is possible.  In general, a 30 year fixed rate mortgage is what you should seek out for a condominium like this.  I would suggest to ask the listing agent (if there is one) for recommendations, or seek out a "Mortgage Broker" (that's a loan officer that represents multiple banks), and maybe even to post a new thread in the property state forum you are seeking help in (I'm guessing Massachusetts?).  Try the subject line of "looking for non-warrantable condo loan in X city" and see what local people can give you guidance.  If the loan is smaller than $100k, it might be hard to find a 30 year fixed rate.  Loans of that size for non-warrantable condos will usually be a 20 year term.  Hope this helps!

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