01 August 2012 @ 01:38 pm
Refinancing Question  
I am considering attempting to refinance my condo. I have excellent credit and I'm working with a bank that I've got an extensive (positive) history with. Based on my profile, my mortgage consultant says the only thing potentially standing in my way is the state of my building's homeowner's association. I assume when the bank is doing their due diligence they'll look at the state of our reserves, the ratio of owner-occupied to rental units, etc. I'm on our board and I know none of our numbers are going to be particularly attractive, but how bad do things have to be to provide grounds for disqualification? Does anyone have experience with this? Basically, I'm trying to decide if it's worth paying $400 for an appraisal in order to get my paperwork submitted knowing there's a chance the bank would decline the deal. What would YOU do, hip domestics?
 
 
( 13 comments — Leave a comment )
demiraks_world: red shoedemiraks_world on August 1st, 2012 07:11 pm (UTC)
Do you have to do the appraisal first?
Pudgy Bunnylindsalicious on August 1st, 2012 07:18 pm (UTC)
Unfortunately, yes.
Ashley: flowerashosaurus on August 1st, 2012 07:39 pm (UTC)
How big is the potential difference in interest rates? You can save a LOT of money in the long run. If you banker feels like the association is going to make this impossible, then shop around or don't do it, but if it's just going to make the process take longer, do it.
Pudgy Bunnylindsalicious on August 1st, 2012 08:09 pm (UTC)
The current deal I'm looking at would save me 2.5% and cut five years off my term (i.e., I'm five years into a 30 year mortgage, but I'd refinance at 20 years). Long run, that's a huge amount of money; short term, it saves me under $100 a month. But I will most likely encounter this issue with any lender, so if it doesn't fly with the people I'm working with currently, it probably won't ever.
felizlahdedah: Chocolate Cake Behind You!guaparella on August 1st, 2012 10:08 pm (UTC)
THIS is a huge difference and something I would probably risk. You have an "in", how bad are the numbers?
Bob Loblaw's Law Blogschmooops on August 1st, 2012 07:57 pm (UTC)
This is a completely unhelpful response, but ... wow, do they really do that? That would suck - it's not like you personally have control over that, right?
Pudgy Bunnylindsalicious on August 1st, 2012 08:13 pm (UTC)
No, I don't have control, but I understand why it's a factor: they need to protect their interests. If I were ever foreclosed on, the worse off the association is, the harder time they'll have trying to unload the property.
Kit: halloween_kit on August 1st, 2012 10:21 pm (UTC)
Ask your banking rep how bad the numbers for your homeowner's association have to be before you won't qualify. Explain that you know some of the association numbers and that you don't want to waste your money on an appraisal and see if they can give you some indication ahead of time how much it'll affect your application.
divinemissa on August 2nd, 2012 12:36 am (UTC)
This is my own personal experience and may be totally irrelevant to your needs, but... I just refinanced in July, switching from a 30 year at 5.5 to a 15 year at 3.25. About $3K in closing costs due to some credit issues (we are both quite good creditwise, but the husband is slightly lower than me alone, and it was only me who had the initial loan).

We live in a townhouse complex with 11 "investment" units and 90 owner-occupied (allegedly). As far as I can tell from the HOA statements they are paying all of their debts in good order and having some reasonable savings.

And the HOA wasn't even a thing. I can't guarantee it will be like that in your market, but the bank made no objection apart from the fact that the HOA took forever and a half to return the required documents. Since you are on your HOA board presumably that will be smoother.

We worked with a mortgage broker (we tried to deal with BOA, who was our original lender, and found them ridiculously uncooperative). That might be an option for you... although it is definitely worth it to shop around. We saved 0.1% by going to broker #2, which adds up in the long run.
Annandaannanda on August 2nd, 2012 04:38 am (UTC)
I work for a mortgage broker (Yay for you using one!) and it's this.

What they are looking for are they ratio of investment properties to owner-occupied/second homes. Most lenders require that you run them through the HUD approved section and if they're not HUD approved, they look at a lot of things. There's generally a 2 page document they have someone fill out. It asks things like "Is this a hotel condo?" "Is the builder still in charge of the project?" "Is the project complete?" "Do you have liability insurance for X amount"" Things like that. The number I think for delinquent HOA dues is maybe 15%? So are more than 15% of the HOA dues 1 or more months delinquent?

I hope that this lays to rest some of your worries!

https://entp.hud.gov/idapp/html/condlook.cfm is the website for the HUD lookup.

Pudgy Bunnylindsalicious on August 2nd, 2012 05:54 am (UTC)
This is basically exactly what I wanted to know. Thank you!
Faky: monkeyfakymcfakerson on August 3rd, 2012 03:54 pm (UTC)
Do you mind if I ask a related question?

Like the OP, I'm on the board of a condo association. I used the link you posted to look up my association, and we're not on the list. Digging through the site, it appears we may be ineligible for HUD-approval; we're styled more like apartment buildings than like townhomes (we have 16 buildings of 8 units apiece; the 8 units share an entrance).

Is there a way to get HUD approval for my association, and if yes- is it worth getting?
Annandaannanda on August 8th, 2012 03:30 am (UTC)
sorry for the silence, I've been on vacation in the woods with no cell or internet service.

As for getting HUD approval, I think you can still get it. The deal with getting it is that it is easier for people to finance the condos. And the HOA doesn't have to go through as much paperwork for each sale as they would if they are HUD approved. I'd contact HUD directly and ask.

I don't do a lot of them. But I JUST did one within the last month so I remembered a bit :D
( 13 comments — Leave a comment )