Do you Know if your Dover NH Condo association is approved for FHA/VA lending?
If not, you better find out- because it should be!
Tens of thousands of condominium owners around the country as well as here in Dover NH are in danger of limiting their ability to sell or refinance their units. Without “Project Approval”, the FHA will no longer insure loans sought by prospective purchasers, eliminating the possibility of FHA /VA lending within the effected developments. With many Dover NH condominium approvals expiring soon there is a tidal wave of applications being submitted.
It is possible for Associations to go directly to HUD to obtain this full approval; however, the process is cumbersome and not entirely transparent and easily understood by the layperson. Many local associations have utilized the services of mortgage brokerages to represent them in this process, but that service comes with a price- it may cost thousands of dollars to the unit owner or association and take up to 12 weeks at this time.
Fortunately I am aware of an alternative to this costly and time-consuming process to obtain FHA approval. DELRAP, short for Designated Endorsement Lender Approval, is the expedited means through which your condominium project can obtain approval. Here in the Dover NH real estate market Bank of America has been beneficial as a DELRAP approved lender, shortening the application process significantly with no cost to the unit owner or association. As a designated lender they have provided my clients with a skilled team to work directly with the condo association to expedite the approval process and ensure that unit owners can expose their property to the largest possible pool pf prospective buyers.
In 2006 FHA loans accounted for a mere 1.7% of all mortgages. At that time the maximum FHA loan amount for a condominium was $369,000. Although that cap was in itself not a limiting factor in many markets across the country, the widespread availability of conventional mortgages with higher loan limits and little or no down payment requirements made FHA loans less favorable.
At the risk of stating the obvious, I can say that times have changed dramatically!
FHA loans now account for almost half of all new mortgages. There are three primary reasons for this change:
- Maximum loan amount has been increased to $793,750
- The down payment required for an FHA/VA loan today is only 3.5%
- Underwriting guidelines are generally more forgiving with respect to credit scoring and reserve requirements.
On the opposite end of the financing spectrum, current conventional loan guidelines and mortgage insurance companies require a down payment ranging from 10% to 25% with more intense scrutiny of credit history and increased reserve requirements. Consequently FHA/VA loans have become a very attractive prospect for purchasers when compared to conventional loans.
A significant side benefit of FHA loans is that these loans are assumable by the next buyer if he/she is able to qualify for the assumption. An assumable loan ‘grandfathered’ at a lower rate is a significant selling point when interest rates go up in the future, as they surely will. This can be a significant advantage when you are competing to sell your home and a buyer can blend your rate with the new rate to get a lower monthly payment.
The unfortunate reality for Dover NH condominium owners wishing to sell without FHA approval is that their pool of potential buyers available to qualify for a mortgage is limited drastically. It seems that in our current market there are fewer and fewer customers able to meet the requirements for conventional financing. In order to reduce current inventory and increase both sales and values in these condominium projects, we in the real estate industry need more new buyers- not less!
Some of the major the benefits of DELRAP approval for Portsmouth NH Condominium Owners are:
- The designated lender will walk you through the application process and review, ensuring all requirements are met quickly and the application is not delayed
- Approval time is reduced significantly as compared to an application submitted directly to HUD
- There is NO COST to either the condominium association or to the unit owner
- FHA/VA approval will attract more buyers, increase sales and values and reduce delinquency of HOA dues by introducing new, qualified residents to the community
- FHA loans can be used to refinance units with less than 20% equity
What can Dover NH condominium owners do?
The first thing to do is to get in touch with the directors of your homeowners association. Educate yourself as to the approval status of your project, and when existing approval is due to expire. Ask them to do what is necessary to get the project through the DELRAP process. Contact a qualified and concerned Realtor like myself, and seek advice about the most capable designated lender to expedite the process without cost to you.