My apologies for the newbie questions, I'm just starting out. I've found a condo property that I am passionate about and the numbers work out, however, the seller is not interested in speaking with me unless I have a pre-approval from a lender or proof of cash. I'm going through my lender and they're requesting a condo questionnaire, a copy of the current budget, and a master insurance policy. The property is a 1B1B first floor condo in North Fort Lauderdale, FL at $59k with rent in the area of about ~1100/month.
My questions are,
How does one complete a condo questionnaire, is it the buyer's responsibility, real estate agent, or seller's responsibility?
Do I need to find an insurance policy before I even secure financing or own the property?
Any advice would be appreciate! Thank you so much.
@Eldin Kalac sorry but some of the advice isn’t too good for this question. Not saying your mortgage broker is 100% correct, but you first have to see if it’s even a warrantable condo. A lot of lenders, one, don’t even lend on non warrantable condos.
Two seems people are confusing getting pre-approved with getting pre-qualified. The mortgage broker sounds like they are doing their homework on the condo and noticed that there would be some additional information needed. A pre-approval is and actual underwritten conditional approval. I'm not sure how much work they have done with you, but maybe the underwriter possibly asked for these items. They would be required during the actual process. It would be a waste of time to go through the whole process only to be denied by the lender because the condo itself doesn't meet guidelines. Condos are special and require a little bit more due diligence then normal SFR.
@Eldin Kalac the master insurance should be provided by the condo association. However, to get pre-approval you don’t need to get all that. Thats mostly once you have agreed to a sales price and have a signed contract with the seller.
just get pre-approval from your mortgage broker first. If you mortgage broker won't give you one without condo questionnare and master policy then change your mortgage broker.
You get the rest of condo info when you have a signed contract. You will need to get condo questionnaire and master policy from the management co or condo assoc and seller will.have to provide you the budget, condo financials and condo docs as required by the state.
@Roman M. Thank you! I figured that was the case and wasn't sure why the mortgage broker was giving me a hard time about it. I'll look for another mortgage broker.
@Eldin Kalac sorry but some of the advice isn’t too good for this question. Not saying your mortgage broker is 100% correct, but you first have to see if it’s even a warrantable condo. A lot of lenders, one, don’t even lend on non warrantable condos.
Two seems people are confusing getting pre-approved with getting pre-qualified. The mortgage broker sounds like they are doing their homework on the condo and noticed that there would be some additional information needed. A pre-approval is and actual underwritten conditional approval. I'm not sure how much work they have done with you, but maybe the underwriter possibly asked for these items. They would be required during the actual process. It would be a waste of time to go through the whole process only to be denied by the lender because the condo itself doesn't meet guidelines. Condos are special and require a little bit more due diligence then normal SFR.
I'll have to make sure that the condo is warrantable before going through with the purchase and signing. Would I need to get all that squared away with each property that I look into before getting pre-approved?
The sellers are refusing to speak with me unless I can show proof of financing through a pre-approval, so I'm not sure what comes first, getting the information from the seller about if the condo is warrantable, or first getting a pre-approval from my mortgage broker.
My mortgage broker has already ran my credit and I've provided him with my background, income, statements, etc., but came back asking me about the condo questionnaire, master insurance policy, and current budget.
@Account Closed all of that is the job of your broker. They have access to the tools to find out if the condo is approved or not.
My suggestion to you is to talk to your broker about the situation. As if you can just get a "pre-qualification" letter based on the items you have given him. This really has nothing to do with the property. Just know that you could go through all this work and find out they can't do the loan. Florida has extra rules for condos compared to other states.
Just voice your concerns with your broker and then if they can't meet your demands look for another one.
You are welcome to send me a PM should you need someone else in Florida.
Condos are a pain and with the small loan amount your lender probably just doesn't want to have to deal with it lol. I'm not sure what financing you are doing but here is a website to see if it is warrantable by FHA standards. I can't say for sure, but you guys can confirm. Is it safe to say if FHA approves it, conventional financing should also work?
@Roman M. Thank you! I figured that was the case and wasn't sure why the mortgage broker was giving me a hard time about it. I'll look for another mortgage broker.
Don't bother - there won't be any brokers to work with a condo at $59K price. You'll need some credit union, portfolio lender and such.
Most condo won't qualify for FHA loans, which means it's hard to get a conventional as well.
If it would be $500K condo, you wouldn't have a problems.
Mortgages start from $50K to make sense to originate them. If you put 20% down, it's already below the min.
That's why condos are so cheap and hard to sell - cash is most likealy the answer.
I have 8 paid off townhouses and can't finance any - just private loans, HELOC (my primary home) and credit cards.
@Account Closed First of all who is the lender? Since this is an inv property and loan is below $50K I doubt this is a conventional loan. I do lots of loans in FL and condo purchases can be a mess. No bank can request a condo questionnaire in the pre-approval process, HOAs charge for the quest, anywhere from $75-$300, its possible your banker wants to know if this building is warrantable, more like is not, at this price range often more than half of the units are rentals and that makes the building non-warrantable, there is no need for a condo quest to find that out, the seller's realtor needs to disclose (make sure is in writing) what is the percentage of investor units. I only request the budget when downpayment is 5% because Fannie and Freddie require a full condo quest where it shows if the HOA contributes 10% towards their reserves, it is only on 10% downpayment and up that only a limited review condo quest is required and the reserve question is not listed there
@Diana Muresan This is through a mortgage broker referred to by a friend; SWBC Mortgage. I see what you're saying about the warrantable or non-warrantable status of the building. From what I'm gathering from the talks I've had today, I might have to seek out a portfolio lender instead of a conventional lender.
I would simply be careful going condo.. maybe learn a little more about all the different types of investments first before committing to a condo deal (of course I dont see what you see or know the numbers you have)